1st Quarter 2018

Portfolio managers are supported by the entire Thornburg investment team.

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Volatility has returned to equity markets after an extended period of calm. During the first quarter, we saw U.S. markets rally nearly 10%, then decline 10%, then rally 10% and decline 10% again. Lots of noise, but not much progress. Late cycle economic worries are starting to creep into investors’ minds as interest-rate hikes will eventually have a tightening effect, and we may be starting to see the beginning of wage inflation, which is generally a reliable indicator of the end of a cycle. Geopolitical risks are also ramping with a full-blown trade war a possibility and increased conflict in the Middle East a reality.


Thornburg All Cap Growth Strategy returned 6.08% (net of fees) in the first quarter of 2018, outperforming the Russell 3000 Growth Index return of 1.48% in the period.

The portfolio has weathered the volatile beginning of the year quite well so far. The market was pretty mixed with the consumer discretionary and information technology sectors solidly positive to start the year, but the staples, energy, and materials sectors all declining. Our performance was driven more by individual stocks than by our sector exposures. The sectors that drove our outperformance were information technology, health care, and consumer discretionary. Our weights are similar to the benchmark but the performance of our stocks was better. This is not unusual for us, given the concentrated nature of our portfolio.

Leading contributors to performance for the quarter included Netflix, Inc., online real estate listing business Zillow Group, Inc., medical device company DexCom, Inc., Amazon.com, Inc., and Wix.com Ltd., which provides website development solutions.

Amazon and Netflix continued to deliver very strong fundamental results as their well-publicized businesses grow at a high rate.

Over the last few years, Zillow has consolidated the real estate listing market and is in the early stages of monetizing its dominant position.

Wix posted strong quarterly results, growing sales and earnings above market expectations.

DexCom had a bounce-back quarter after concerns around competition brought the stock down during the second half of 2017. DexCom makes a glucose-monitoring system for diabetes patients that we believe is the best on the market and will remain so for the foreseeable future.

Principal detractors from performance this quarter were cable and broadband provider Comcast Corp., Facebook, Inc., Monster Beverage Corp. which primarily sells energy drinks, nitrogen and phosphate fertilizer manufacturer CF Industries Holdings, Inc., and Walmart Inc.

After several quarters of subscriber growth surprising positively, quarterly results were disappointing for Comcast. Its interest in acquiring Sky, the U.K. satellite TV company, also seemed to rattle investor confidence.

Sales at Monster Beverage decelerated during the quarter, but we are still excited about the long-term trends in the global energy-drink category.

Facebook shares fell as the company faced scrutiny over data usage and privacy issues.

After strong stock performance in 2017, CF Industries hit a few bumps to start the year. The stock reacts to near-term nitrogen price changes, which can have speculative drivers. We believe over time nitrogen prices will trend higher due to pent-up demand, limited supply, and lower exports coming out of China.

Walmart’s stock declined after a disappointing quarter for its e-commerce segment. Although it is still a very small piece of the company’s overall business, it seems to dominate investor mindshare and drive sentiment.


We remain optimistic that global growth can continue to be broad-based and above trend, but we do see a moderation in momentum. Although there are few, if any, overall winners in a trade conflict, we do expect the companies we own in this portfolio to be relatively more insulated in such an event due to the nature of the robust business models with sustainable competitive advantages and secular growth themes we favor.

As always, we do not attempt to time markets or geopolitical events, but rather take a long-term, disciplined approach to investing. Through our fundamentally driven process, we seek to capture the most compelling, high-quality growth stocks.

Thank you for investing in Thornburg All Cap Growth Strategy.

Contributors to Performance1
(Representative Account)
NameContrib %Avg Wgt %
Netflix, Inc. 0.69 1.66
Zillow Group, Inc. 0.65 2.41
DexCom, Inc. 0.64 2.51
Amazon.com, Inc. 0.62 3.17
Wix.com Ltd. 0.61 1.86
Detractors from Performance1
(Representative Account)
NameContrib %Avg Wgt %
Comcast Corp. -0.27 2.07
Facebook, Inc. -0.27 3.07
Monster Beverage Corp. -0.24 2.39
CF Industries Holdings, Inc. -0.23 2.05
Walmart, Inc. -0.22 2.48

1. Past performance does not guarantee future results. To obtain the calculation methodology and a list showing the contribution of each holding in the representative account to the overall account's performance during the reporting period, please email a request to bdg@thornburg.com. The holdings identified do not represent all of the securities purchased, sold or recommended for advisory clients.

Important Information

Performance data for the All Cap Growth Strategy is from the All Cap Growth Composite, inception date of January 1, 2001. The composite includes non-wrap discretionary accounts invested in the All Cap Growth Strategy. Returns are calculated using a time-weighted and asset-weighted calculation including reinvestment of dividends and income. Returns are annualized for periods greater than one year. Individual account performance will vary. The performance data quoted represents past performance; it does not guarantee future results. Gross of fee returns are net of transaction costs. Net of fee returns are net of transaction costs and investment advisory fees. For periods prior to 2011, net returns for some accounts in the composite also reflect the deduction of administrative expenses. Thornburg Investment Management Inc.’s fee schedule is detailed in Part 2A of its ADV brochure. Performance results of the firm's clients will be reduced by the firm's management fees. For example, an account with a compounded annual total return of 10% would have increased by 159% over ten years. Assuming an annual management fee of .75%, this increase would be 142%.


 As of 3/31/18

1 Yr

3 Yr

5 Yr

10 Yr

Inception 1/1/2001

All-Cap Growth Composite (Net)
All-Cap Growth Composite (Gross)
Russell 3000 Growth Index

Unless otherwise noted, the source of all data is Thornburg Investment Management, Inc., as of 3/31/18.

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.

Holdings may change daily and may vary among accounts.

The information provided in this report should not be considered a recommendation to purchase or sell any particular security. There is no assurance that any securities discussed herein will remain in an account's portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed may not represent an account's entire portfolio and in the aggregate may represent only a small percentage of an account's portfolio holdings. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.

Portfolio holdings and characteristics shown herein are from a representative account managed within the investment composite. The representative account is selected based on account characteristics that Thornburg believes accurately represent the investment strategy as a whole. Should these characteristics change materially, Thornburg may select a different representative account. Holdings may change daily and may vary among accounts, which may contribute to different investment results. The representative account information is supplemental to the strategy’s composite and GIPS compliant presentation.

Portfolio construction will have significant differences from that of a benchmark index in terms of security holdings, industry weightings, asset allocations and number of positions held, all of which may contribute to performance, characteristics and volatility differences. Investors may not make direct investments into any index.

Please see our glossary for a definition of terms.