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.
31 December 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 1.14% (I shares), which translates to just 12.6% 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 7.01%, which translates to 22.3% 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 22% of the S&P return for the year was disappointing and 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.

Important Information

Source of data: Factset, BBH, Confluence, Bloomberg—unless otherwise stated

Date of data: 31 December 2019—unless otherwise stated

This does not constitute or contain an offer, solicitation, recommendation or investment advice with respect to the purchase of the Funds described herein or any security. The Fund’s shares may not be sold to citizens or residents of the United States or in any other state, country or jurisdiction where it would be unlawful to offer, solicit an offer for, or sell the shares. For information regarding the jurisdictions in which the Fund is registered or passported, please contact Thornburg at contactglobal@thornburg.com or +1.855.732.9301. Fund shares may be sold on a private placement basis depending on the jurisdiction. This should not be used or distributed in any jurisdiction, other than in those in which the Fund is authorized, where authorization for distribution is required. Thornburg is authorized by the Fund to facilitate the distribution of shares of the Fund in certain jurisdictions through dealers, referral agents, sub-distributors and other financial intermediaries. Any entity forwarding this, which is produced by Thornburg in the United States, to other parties takes full responsibility for ensuring compliance with applicable securities laws in connection with its distribution.

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