Thornburg's THOR ETF launches with a valuation-conscious strategy, skipping the multiple expansion that lifted markets. Top holdings include KMB, ORA, TTE.
Thornburg Investment Management launched an ETF that avoids a pattern powering much of the market's gains: rising valuations, not stronger earnings.
The THOR ETF, ticker THOR, started trading on the New York Stock Exchange on June 22. It carries the same valuation-driven approach as Thornburg's flagship global equity income strategy, the Investment Income Builder Fund (TIBIX).
Global equity multiples have climbed across nearly every corner of the market over the past decade. Mega-cap technology names and smaller international stocks both saw gains. Adam Sparkman, a manager of client portfolio management at Thornburg, outlined the trend in a July report. The forward price-to-earnings ratio of the MSCI World Index climbed from 15.3x to about 19.1x over the past decade, a gain of roughly 25%.
That pattern held outside the largest U.S. tech stocks, Sparkman said. The equal-weighted MSCI World Index saw about 16% multiple expansion. The MSCI EAFE Index, which tracks developed markets outside North America, gained roughly 6%.
TIBIX offers a counterpoint, according to Sparkman's report. The mutual fund's price-to-earnings multiple is lower today than it was a decade ago. Even so, its annualized 10-year total return of 12.57% ran close to the MSCI World Index's 13.06%. It also topped the equal-weighted MSCI World Index at 9.32% and the MSCI EAFE Index at 9.19%.
Valuations across much of the developed world sit above historical norms, Sparkman wrote. Geopolitical and macroeconomic uncertainty leaves index-heavy portfolios exposed to a sudden re-rating lower. A flexible, bottom-up approach, he added, lets a manager shift capital away from stocks priced for perfection. Capital can instead move toward names the market has overlooked.
THOR invests in a globally diversified portfolio of dividend-paying companies, according to Thornburg. The fund also layers on a selective, actively managed options overlay designed to boost income while preserving upside potential. Unlike option-income ETFs that mechanically sell calls against an index every month, THOR adjusts its overlay based on volatility and valuation, according to Thornburg.
Top holdings include Kimberly-Clark Corp. (KMB), Orange S.A. (ORA) and TotalEnergies SE (TTE), each a cash-generating dividend payer across different sectors. A total expense ratio of 0.79% applies to the fund, according to Thornburg. THOR pays distributions quarterly and is benchmarked against the MSCI World Index.
That downside discipline traces back to TIBIX. The mutual fund captured just 32.24% of the MSCI World Index's decline over the trailing three years, the report showed.
Kimberly-Clark, one of THOR's top holdings, carries an Alpha Score of 41 out of 100 at AlphaScala, reflecting a mixed outlook. MSCI Inc., the index provider, scores 46.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.