In the first quarter of 2026, the Thornburg International Growth Fund (I share class) navigated a dynamic global economic landscape to deliver a performance that modestly surpassed its benchmark. Despite a challenging period for international equities, marked by shifts in U.S. monetary policy, divergent central bank strategies, and persistent geopolitical uncertainties, the fund's strategic decisions in specific sectors and geographies proved beneficial. The fund's ability to selectively outperform highlights the impact of diligent research and active management in mitigating broader market headwinds.
International equity markets experienced a downturn during the initial quarter of 2026. This period was characterized by a pivotal change in the U.S. Federal Reserve's monetary policy, specifically three interest rate reductions towards the end of the previous year. Concurrently, central banks in other regions adopted varying monetary stances, further complicating the global economic picture. Lingering geopolitical risks added another layer of complexity, influencing market volatility and investor sentiment. These factors collectively shaped an environment where careful portfolio positioning was crucial for performance.
The fund's positive relative performance was significantly influenced by its strategic asset allocation and stock selection, particularly in the Information Technology and Health Care sectors. Within Information Technology, the fund's holdings benefited from robust demand in areas such as AI infrastructure and semiconductor manufacturing, reflecting the ongoing digital transformation and technological advancements. In Health Care, specific investments in companies with strong product pipelines or innovative solutions contributed positively, demonstrating the resilience and growth potential of the sector.
Geographically, the fund's success was most pronounced in Europe. An overweight position and astute stock picking in the Netherlands yielded strong returns. Additionally, selective investments in France and Germany demonstrated favorable outcomes, as the chosen companies exhibited solid fundamentals and resilience amidst broader market pressures. These regional successes underscore the importance of detailed, country-specific analysis in identifying opportunities that may not be apparent at a broader market level. The ability to pinpoint and capitalize on these localized strengths was a key differentiator for the fund's performance during this period.
The first quarter of 2026 presented a complex investment climate due to shifts in global monetary policies and geopolitical tensions. Despite these challenges, the Thornburg International Growth Fund's I share class achieved a return of -3.51%, outperforming the MSCI ACWI ex-U.S. Growth Index by 11 basis points. This outcome underscores the effectiveness of the fund's investment approach, which prioritized tactical allocations and meticulous stock selection within key sectors like Information Technology and Health Care. The fund's geographic focus, particularly its strong performance in the Netherlands, France, and Germany, further contributed to its relative success, showcasing the benefits of a diversified yet targeted investment strategy in navigating an unpredictable global market.
