“Our stock selection philosophy centers on building a focused, but diversified portfolio of international companies. We like to find industry leaders when they are out of favor, offering value in the context of long-term prospects. The portfolio will be invested primarily in the developed markets of Europe and the Asia Pacific region, but does include some emerging-market holdings. We believe diversification among three types of stocks below provides the opportunity for our portfolio to produce positive total returns over time. Stock selection is a key element in achieving our objectives.”
— Bill Fries
We focus on constructing a core portfolio with potential to outperform benchmarks over time — with lower volatility. One way we mitigate volatility is via Thornburg’s three-basket diversification construct:
Basic value companies are, in our opinion, financially sound, well-established businesses selling at low valuations relative to net assets or earnings power.
Consistent earners normally exhibit steady earnings growth, cash-flow characteristics, and/or dividend growth. These companies may have above-average profitability measures, and may sell at above-average valuations.
Emerging franchises are often in the process of establishing a leading position in a product, service, or market, or have the potential to grow at an above-average rate.
2003 – Portfolio Manager Bill Fries was Morningstar’s 2003 Fund Manager of the Year for the international stock category. This award, according to Morningstar, “recognizes portfolio managers who demonstrate excellent investment skill and the courage to differ from the consensus. To qualify for the award, managers must have not only a great year, but also must have a record of delivering outstanding long-term performance and of aligning their interests with shareholders’. . . . Winners are chosen based upon Morningstar’s proprietary research and in-depth evaluation by its senior analysts.”
Thornburg did not receive this award in subsequent years.