Thornburg Investment Management Revolutionizes Investment Products with ETF Share Classes
A New Era of Investment Flexibility
In a bold move, Thornburg Investment Management is poised to introduce exchange-traded fund (ETF) share classes to its mutual funds, offering retail investors a unique blend of tax efficiency and tradeability. This innovative approach, outlined in a January 8 filing with the Securities and Exchange Commission, enables investors to access Thornburg’s proven strategies through ETF share classes, mirroring the underlying portfolios of its mutual funds.
Meeting the Evolving Needs of Investors
With $47 billion in client assets under management, Thornburg is committed to providing customers with a choice in investment products. By introducing ETF share classes, the firm aims to cater to the growing demand for tax-advantaged trading flexibility and meet the shifting needs of investors.
Industry-Wide Shift
Thornburg is not alone in its pursuit of ETF share classes. Dozens of asset managers are racing to replicate Vanguard’s patented mutual fund-ETF share class structure, which expired in May 2023. This trend is expected to transform the way investment products are packaged and distributed to investors.
Key Benefits and Protections
Under the proposed structure, investors can convert their mutual fund share classes into ETF shares tax-free through an exchange privilege. Additionally, Thornburg has proposed robust investor protections, including clear disclosure about differences between share classes and ongoing board oversight of potential conflicts.
A Broader Industry Shift
If approved, Thornburg will join a growing list of firms that have converted mutual funds entirely to ETFs. In 2024 alone, 55 mutual funds made the switch, driven by increasing demand for ETF structures. By leveraging its existing mutual fund track records, Thornburg can offer the benefits of both structures to different types of investors, setting a new standard for investment product flexibility.
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