Thornburg Investment Management Enters the ETF Arena
In a strategic move to tap into the rapidly growing exchange-traded fund market, Thornburg Investment Management has launched two new ETFs: the Thornburg International Equity ETF (TXUE) and the Thornburg International Growth ETF (TXUG). This marks a significant expansion for the Santa Fe, New Mexico-based firm, which manages over $45 billion in assets.
A Shift Towards ETFs
The introduction of these actively managed ETFs is part of a broader trend among legacy asset managers to cater to clients’ evolving needs. By entering the ETF space, Thornburg aims to provide investors with more flexibility and options.
TXUE and TXUG: A Closer Look
Both TXUE and TXUG will focus on non-U.S. developed market equities, with distinct differences from their mutual fund counterparts. TXUE, seeded with $40 million from a Thornburg client, is managed by Lei Wang and Matt Burdett, while TXUG, launching Thursday, is led by Sean Sun and Nicholas Anderson. Notably, these ETFs will not invest in emerging market equities and will have more concentrated portfolios compared to their mutual fund peers.
Building on Existing Strengths
TXUE shares similarities with the $2.8 billion Thornburg International Equity mutual fund (TGVIX), launched in 2001, which boasted a 12% gain last year and ranked in the sixth percentile of Morningstar’s large-blend category. Meanwhile, TXUG draws parallels with the $777 million Thornburg International Growth mutual fund (TINGX), launched in 2007, which gained 2.4% last year and ranked in the sixty-third percentile of Morningstar’s large-growth category.
A Deliberate Push into ETFs
Thornburg’s foray into ETFs is a calculated move, following the direction of asset flows. The firm has filed with the Securities and Exchange Commission to create an ETF share class for its mutual funds, joining over three dozen other mutual fund companies seeking similar permission.
Future Plans and Strategies
More ETFs are already in the pipeline, including the Thornburg Core Plus Bond ETF (TPLS) and Thornburg Multi Sector Bond ETF (TMB), slated for launch in the coming months. According to Jesse Brownell, Thornburg’s global head of distribution, there are no plans to clone or convert existing mutual funds. Instead, the focus is on providing wrapper optionality for clients and exploring growth opportunities in the ETF space.
A Strategic Play
Thornburg’s migration into ETFs was signaled last year with the hiring of Richard Kuhn, a 20-year Invesco veteran who now heads product at Thornburg. Brownell emphasized the importance of having all optionality on the table, particularly with regard to the share class filing. By doing so, Thornburg is positioning itself for potential changes in the regulatory landscape, ensuring it remains competitive in the rapidly evolving ETF market.
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