With investors demanding income, as well as a greater number of environmental, social and governance (ESG) holdings in their portfolios, Thornburg Investment Management fund managers seek to deliver the goods by, in some cases, pursuing an active bent beyond what’s suggested by a fund’s benchmark.
A cluster of Thornburg fund managers gathered Wednesday in Manhattan for a press breakfast to discuss the specifics of their global generalist perspective, the pursuit of income, stocks that meet ESG criteria and other topics.
Thornburg Value Fund Co-Manager Connor Browne said he favors investing within the healthcare and advertising industries for juicy returns.
“Traditional television is still 40 percent of advertising dollars spent in the U.S. but it’s on the decline whereas digital advertising online has grown,” Browne said, noting that Google and Facebook are among the fund’s top holdings.
“Financial advisors should be pursuing funds with high active share, which measures a manager’s holdings compared to its corresponding benchmark index,” Browne said.
An NYU study found that funds with the highest active share significantly outperform their benchmark indexes both before and after expenses and they persist in strong performance even after controlling for momentum.
“Every fund we’ve ever started has added considerable value with active management after fees and expenses,” said Brian McMahon, CEO and CIO of Santa Fe, N.M.-based Thornburg. “The common thread is a bottom up, fundamental analysis within focused portfolios.”
That approach has led to a focus on income in infrastructure asset-based companies that pay dividends, along with telecommunications companies around the world, McMahon said.
That’s evident in the Thornburg Investment Income Builder Fund, where important holdings include telecommunication giants such as China Mobile and Telenor.
“China Mobile is the biggest mobile telecommunications company in the world with more than 800 million subscribers,” McMahon said. “Telenor is interesting because it’s the American equivalent of AT&T in Norway and they own telecom companies in India, Pakistan, Myanmar, Malaysia and Thailand.”