On June 23, Thornburg expanded its active ETF lineup with the launch of the Thornburg Premium Income Builder ETF (THOR). The fund targets dividend paying equities at the global level and pairs them with an options strategy that generates income. The strategy will primarily invest in equity securities and options strategies across various global markets. It carries an expense ratio of 79 basis points.
Key Takeaways
- The fund primarily generates income by investing in a selection of dividend-paying companies and income-generating options strategies.
- Portfolio managers use a high-conviction, valuation-sensitive approach to select durable businesses across global markets.
- The firm’s expanding ETF platform has grown to over $750 million in assets since launching its first fund 18 months ago.
“We’re expanding how clients access Thornburg’s investment expertise through a growing lineup of actively managed ETFs built on the same fundamental research-driven, high-conviction approach that has defined our firm for decades,” said Mark ZInkula, CEO, Thornburg Investment Management.
THOR builds upon the success of the firm’s Thornburg Investment Income Builder Strategy, bringing that same income generation expertise into a flexible, actively managed ETF
Sustainable Income Through Active Management
The fund generates consistent income by investing in a globally diversified portfolio that targets high-quality, dividend-paying equity securities. Equity exposure is not restricted by market capitalization or geography, allowing for significant investment in international companies, including developing markets. This strategic approach allows investors to benefit from the capital appreciation through global market exposure. Meanwhile. they can capture steady dividend payments across various sectors.
To enhance income generation, the strategy also employs option writing. The fund will write covered calls and put option contracts on individual securities and indexes. It will harvest premiums on the options for additional income.
“As markets become more interconnected and more volatile, investors are increasingly seeking strategies focused on identifying durable businesses and adapting to changing conditions,” said Brian McMahon, vice chairman, chief investment strategist, and portfolio manager at Thornburg, in a press release. “THOR takes a valuation-sensitive approach that seeks to balance income generation, downside resilience, and long-term total return potential.”
The fund employs a high-conviction approach to select durable businesses flexible enough to keep up with changing market conditions. By utilizing a non-diversified structure, portfolio managers have the flexibility to concentrate capital on these select high-conviction investments. THOR can also invest in a wide variety of fixed income securities as needed, to provide downside resilience and yield stability.
Building on Rapid ETF Success
“THOR represents the latest expansion of Thornburg’s actively managed ETF platform and reflects our commitment to meeting evolving client needs through innovative and highly active investment solutions,” said Matt Burdett, head of equities and portfolio manager at Thornburg, in a press release.
Despite launching its first ETF 18 months ago, Thornburg’s ETF platform has seen rapid growth. It currently manages nearly $760 million in assets. Its two largest funds are the Thornburg International Equity ETF (TXUE ) and the Thornburg Multi Sector Bond ETF (TMB ), which combine for over $700 million in total assets.
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