A Distinctive View of Emerging Markets Investing

Thornburg Developing World Fund concentrates on managing the special risks associated with the emerging-markets asset class and on providing strong risk-adjusted returns—by focusing on self-funding companies that generate strong free cash flow and are not dependent on capital markets in times of stress.

“We want to craft a portfolio that can participate in the long-term development of emerging markets, but that won’t impair capital permanently when times get tough. We’re therefore focused on financially sound, free-cash flow generative companies, denominated in currencies with a limited degree of external vulnerability.”

Overall Approach

Managing Volatility in a Way That Matters
Founded during the financial crisis when many emerging-markets stocks were down 40% to 60%, Thornburg’s strategy attempts to create a mechanism to participate in the long-term development of the emerging markets and manage volatility in a way that matters.

Growing Businesses Tied to the Emerging-Markets Consumer Class
We want to own a portfolio of promising, growing businesses that are tied to the growth of the emerging-markets consumer class.

Companies That Can Fund Their Own Growth
We are interested in firms that can fund their own growth without having to turn to external sources, companies that are less likely to suffer permanent loss and impair investors’ capital during times of market crisis.

Countries with Limited External Dependence
Because of the more volatile nature of the asset class, we pay particular attention to the economies in which we invest. We look for countries with positive current account and foreign direct investment numbers — those less reliant on volatile stock and bond flows.

In short, we also look for financially sound, free-cash-flow generative countries with limited external dependence.

The Collaborative Approach of a Global Generalist
The portfolio is concentrated, with around 40-65 names, and is constructed with collaboration and input from managers and analysts across the Thornburg equity team, in accordance with Thornburg’s global generalist structure.

What Makes The Fund Different?

The fund has a bias towards higher-quality companies with a more conservative capital structure and does not believe he needs to go far out on the risk curve to capture the higher returns associated with the emerging-markets asset class.

Portfolio Construction

A Focused Opportunity Set
We tend to avoid countries and economies with high external dependence, in part to limit the portfolio’s vulnerability to currency devaluations. This cautious approach to investing in countries where we may have some concern is, we believe, more effective than currency hedging.

Three-Basket Style Diversification
We employ Thornburg’s three-basket style diversification construct: basic values are financially sound companies with well-established businesses; consistent earners are companies with steady earnings, cash flow, or dividend growth; and emerging franchises are companies in the process of establishing a leading product, service, or market.

Diversification by Style, Currency, Market Cap and Geography

  • By style, using Thornburg’s basket construct
  • By currency, with sensitivity to stability versus volatility
  • By market cap, with meaningful portions devoted to small-, mid-, and large-cap stocks
  • By geography, see the top ten countries under the portfolio tab above
Important Information
Before investing, carefully consider the Fund’s investment goals, risks, charges, and expenses. For a prospectus or summary prospectus containing this and other information, contact your financial advisor or visit our literature center. Read them carefully before investing.

Investments carry risks, including possible loss of principal. Additional risks may be associated with investments outside the United States, especially in emerging markets, including currency fluctuations, illiquidity, volatility, and political and economic risks. Investments in small- and mid-capitalization companies may increase the risk of greater price fluctuations. Investments in the Fund are not FDIC insured, nor are they bank deposits or guaranteed by a bank or any other entity.

The performance of any index is not indicative of the performance of any particular investment. Unless otherwise noted, index returns reflect the reinvestment of income dividends and capital gains, if any, but do not reflect fees, brokerage commissions or other expenses of investing. Investors may not make direct investments into any index.

The Fund may invest in shares of companies through initial public offerings (IPOs). IPOs have the potential to produce substantial gains and there is no assurance that the Fund will have continued access to profitable IPOs. As Fund assets grow, the impact of IPO investments on performance may decline.

Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

Class R shares are limited to retirement platforms only.

Class I shares may not be available to all investors. Minimum investments for the I share class may be higher than those for other classes.

There is no guarantee that the Fund will meet its investment objectives.

Please see our glossary for a definition of terms.

Thornburg mutual funds are distributed by Thornburg Securities Corporation.

Thornburg Investment Management, Inc. mutual funds are sold through investment professionals including investment advisors, brokerage firms, bank trust departments, trust companies and certain other financial intermediaries. Thornburg Securities Corporation (TSC) does not act as broker of record for investors.