Thornburg Long/Short Equity Fund

4th Quarter 2019

Bimal Shah
Bimal Shah
Portfolio Manager and Managing Director
Robert MacDonald, CFA
Robert MacDonald, CFA
Portfolio Manager and Managing Director
Portfolio managers are supported by the entire Thornburg investment team.
December 31, 2019
Market Review

The fourth quarter of 2019 saw the S&P 500 Index accelerate into the close, continuing its year-long uptrend by posting a positive return of 9.07% for the year’s final three-month period. Broadly, the market benefited from increased optimism over a potential U.S.-China phase-one trade deal, providing a measure of relief for equity investors. Markets got additional support after the U.S. Federal Reserve lowered the Fed funds rate during the quarter, maintaining its accommodative, if not dovish, stance.

Fourth-Quarter 2019 Performance Highlights
  • For the fourth quarter, the Thornburg Long/Short Equity Fund was up 1.78% (I shares), which translates to just under 20% of the benchmark S&P 500 Index return of 9.07%, with an average net exposure of 32%. For the full year, the Thornburg Long/Short Equity Fund was up 8.50%, which translates to 27% of the S&P 500 Index return of 31.49%. The average net exposure for the year was 32%.
  • For the fourth quarter, our long book was up 8.82% on a total return basis, with an average weight of 109.63%, while our short book was up 9.91%, with an average weight of negative 77.34%. For the year, our long book was up 28.49%, with an average weight of 106.51%, while our short book was up 28.25%, with an average weight of negative 74.23%.
  • During the fourth quarter and for the full year, our more growth-oriented long investments and relatively balanced exposure between the long and short books contributed to portfolio returns, while the continued outperformance of high-quality and low-volatility stocks detracted from overall results.
Current Positioning and Outlook

We remain very excited about the valuation and prospects of the holdings within our long book, and equally unexcited about the prospects for the businesses that we’re short. Since the fourth quarter of 2018, we’ve worked to position the portfolio to perform better during the next downturn. While this is what our investors expect from the Thornburg Long/Short Equity Fund, 2019 was not the sort of year that flattered that effort. While 27% of the S&P return for the year was disappointing and somewhat below our average net exposure of 32%, it’s not outside the realm of expected outcomes for the portfolio. We are confident that a different sort of environment for U.S. stocks at some point in the future will better highlight the diversification advantages of the Thornburg Long/Short Equity Fund.

Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate so shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than quoted. For performance current to the most recent month end, see the mutual funds performance page or call 877-215-1330. The maximum sales charge for the Fund’s A shares is 4.50%.

Important Information

Unless otherwise noted, the source of all data, charts, tables and graphs is Thornburg Investment Management, Inc., as of 12/31/19.

Data prior to 12/30/16 is from the predecessor fund.

Notable purchases and sales includes material transactions other than recently purchased securities, which may be excluded for best execution purposes.

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.

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. A short position will lose value as the security's price increases. Theoretically, the loss on a short sale can be unlimited. Investments in derivatives are subject to the risks associated with the securities or other assets underlying the pool of securities, including illiquidity and difficulty in valuation. Non-diversified funds can be more volatile than diversified funds. Investments in the Fund are not FDIC insured, nor are they bank deposits or guaranteed by a bank or any other entity.

The views expressed are subject to change and do not necessarily reflect the views of Thornburg Investment Management, Inc. This information should not be relied upon as a recommendation or investment advice and is not intended to predict the performance of any investment or market.

Any securities, sectors, or countries mentioned are for illustration purposes only. Holdings are subject to change. Under no circumstances does the information contained within represent a recommendation to buy or sell any security.

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.

Portfolio attributes and holdings can and do vary.

Morningstar Long/Short Equity Category – Long/short portfolios hold sizeable stakes in both long and short positions in equities, exchange traded funds, and related derivatives. At least 75% of the assets are in equity securities or derivatives, and funds in the category will typically have beta values to relevant benchmarks of between 0.3 and 0.8 over a three-year period.

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.

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

Please see our glossaryglossary (www.thornburg.com/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.