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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Thornburg Strategic Income outperformed in Q2 2026 by maintaining shorter duration as new Fed Chair Warsh pivoted hawkish and oil spiked to $118 on Iran conflict before retreating. The portfolio's defensive positioning and BBB/BB overweights captured spread tightening while avoiding rate pain."
The Thornburg Strategic Income Fund returned 1.19% in Q2 2026, outperforming the Bloomberg U.S. Universal Index by 27 basis points, driven by defensive duration positioning and credit overweights. The quarter was shaped by intertwined geopolitical and monetary shocks: the U.S.-Iran conflict drove oil prices to $118 before a June ceasefire brought them back to $73, while new Fed Chair Kevin Warsh struck a hawkish tone that reversed easing expectations and drove markets to price in a 25 basis point hike by year-end. Treasury markets bear-flattened sharply, with 2-year yields rising 38 bps and 10-year yields rising 15 bps. The portfolio's shorter duration (4.11 vs 5.67 for the index) and overweights to BBB and BB issues contributed 37 basis points combined to relative performance. Looking ahead, the managers remain broadly optimistic but expect yields to stay elevated and range-bound due to sticky inflation (core PCE at 3.4%), fiscal concerns, and lingering geopolitical risk. Credit spreads remain extremely tight at multi-decade lows, leaving little cushion if growth disappoints or the Fed follows through on its hawkish stance.
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