Thornburg International Value Fund

4th Quarter 2019

Lei Wang, CFA
Lei Wang, CFA
Portfolio Manager and Managing Director
Di Zhou, CFA, FRM
Di Zhou, CFA, FRM
Portfolio Manager and Managing Director
Portfolio managers are supported by the entire Thornburg investment team.
December 31, 2019
Market Review

International equities performed well in 2019 as a number of macro headwinds, which affected markets in 2018 (trade, monetary policy, Brexit), abated. After a fourth quarter selloff in 2018 left many stocks arguably undervalued, markets got off to a strong start in 2019, were choppy through the middle of the year and finished strong in the fourth quarter. For the year, the MSCI EAFE Index, which focuses on developed markets, returned 22.0% and outperformed the MSCI ACWI ex-USA Index, which returned 21.5%. The ACWI ex-USA Index includes emerging markets, which underperformed the broader index.

Fourth-Quarter 2019 Performance Highlights
  • In the fourth quarter, the Thornburg International Value Fund delivered mixed performance compared to its two benchmark indices, returning 8.49% (I shares), ahead of the MSCI EAFE’s 8.17% return but modestly behind the 8.92% return of the MSCI ACWI ex-USA Index.
  • While positive stock selection helped the fund’s relative performance versus the ACWI ex-USA during the fourth quarter, it wasn’t enough to offset the negative impact of our underweight to emerging markets. Relative to the EAFE Index, our allocation to Emerging Asia drove outperformance. Versus both indices, our cash allocation was a modest drag to performance.
  • In 2019 the fund (I shares) outperformed the EAFE by 7.1% and the ACWI ex-USA Index by 7.6%. The substantial outperformance versus both indices was driven almost entirely by bottom-up stock selection, which is central to our investment process.
Current Positioning and Outlook

After a 29.1% return in 2019 (I shares), the fund enters 2020 with international markets less undervalued than in 2018 but with many positives intact: monetary policy remains supportive, trade momentum is positive, euro area Purchasing Managers’ Indices have bottomed and downside risk on Brexit has lessened. On the cautious side, geopolitical jitters have resurfaced, trade policy can change with a tweet, and the upcoming U.S. presidential election could bring negative surprises. The fund consistently trimmed positions into strength during the year but reinvested most of the proceeds in the fourth quarter, much of it in Basic Value stocks, although Consistent Earners remains our largest allocation. The fund remains overweight the eurozone and Emerging Asia and underweight Japan and the U.K., although less so in all cases than earlier in the year. Industrials is our largest sector overweight and financials our largest underweight.

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.

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 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.

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.

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