zA distinctive location is not an investment process. But it can shape the culture in which investment decisions are made. For more than four decades, Thornburg’s base in Santa Fe has encouraged a combination of independent judgement, rigorous debate and valuation discipline that is increasingly relevant in today’s narrow global equity market.
From Santa Fe to investment decisions
When Garrett Thornburg founded Thornburg Investment Management in 1982, Santa Fe was far removed from the traditional centres of finance. That distance created room to build a firm around long-term thinking rather than proximity to the prevailing market narrative. Remaining there has been a deliberate choice, but its investment relevance must be demonstrated through process rather than geography.
One expression is Thornburg’s collaborative generalist research structure. Instead of confining investors to narrow sector silos, it asks them to compare opportunities across industries, regions and business models. The purpose is not to know less about individual companies. It is to place that knowledge in a broader capital-allocation context.
For fund selectors, this distinction matters. Research depth alone does not create excess returns. Information must be interpreted, challenged and translated into security selection, position sizing and sell decisions. A generalist structure makes every holding compete against the best ideas available globally, while debate helps expose assumptions that can become embedded when investment teams share the same market consensus.
Why discipline matters now
That discipline is being tested by an unusually narrow market. The S&P 500 delivered its fourth-largest quarterly advance since 2000 in the second quarter of 2026, despite beginning the period at elevated levels[1]. Yet only around one-third of its constituents outperformed the index during the first half, the lowest proportion in more than 35 years[2]. Investors have been rewarded for owning a relatively small group of AI-linked winners.
The fundamentals behind that leadership should not be dismissed. Recent hyperscaler results show accelerating cloud revenue, stronger margins and early evidence that heavy AI investment is producing attractive returns. But stronger fundamentals do not remove the need for valuation discipline. Expectations, capital intensity and the price paid still determine the asymmetry between potential upside and downside.
Nor is the opportunity set confined to the market leaders. Strong businesses across global markets can offer comparable growth prospects at lower valuations, frequently with higher dividend yields. For professional investors whose global equity allocations have become increasingly dependent on US mega-cap technology, looking more widely can diversify both sources of return and sources of risk.
Equity Income Builder: valuation before yield
Thornburg Equity Income Builder applies this perspective through a valuation-conscious global equity income approach. The strategy seeks long-term total returns from businesses with durable cash flows, disciplined capital allocation and the ability to sustain and grow shareholder distributions. Income is part of the return proposition, not a substitute for fundamental analysis.
The team therefore does not simply screen for the highest yields. It assesses a company’s ability to generate cash and management’s willingness to allocate it in shareholders’ long-term interests. It then asks whether those qualities are available at a price that offers an attractive prospective return. A strong company can still be a poor investment when expectations already leave little room for disappointment.
The benchmark-agnostic portfolio typically holds 50 to 70 companies. Country, sector and market-cap exposures reflect bottom-up assessments rather than index weights. This gives Equity Income Builder a potentially differentiated role as a core global equity allocation or a complement to passive and growth-heavy portfolios. Santa Fe provides the setting; the investment case rests on a repeatable combination of research, valuation and portfolio construction.
| THORNBURG EQUITY INCOME BUILDER Objective: Long-term total returns through companies able to sustain and grow shareholder distributions. Approach: Bottom-up research, disciplined valuation and benchmark-agnostic portfolio construction. Portfolio role: A potential core global equity allocation or complement to passive and growth exposure. Learn more about the fund here: https://www.thornburg.com/product/ucits-funds/uib/TBIIBUI-ID/ |
Opinion article by Josh Rubin, client portfolio manager at Thornburg Investment Management
[1] Source: Morningstar, as of 30 June 2026
[1] Source: UBS, as of 30 June 2026
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