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Thornburg's THOR Skips the Valuation Rally

BY | ETF Database
6:32 am ET 07/27/26 | 9 VIEWS
Thornburg Investment Management’s newest income ETF, THOR, was built around a pattern that has quietly powered much of the market’s gains. That pattern is rising valuations, not stronger earnings.Key Takeaways: The new THOR ETF targets global dividend income through active stock picking. Rising valuations, not earnings growth, powered much of the last decade’s market gains. Sister strategy TIBIX now carries a lower price-to-earnings ratio than it did ten years ago. Global equity multiples have climbed across nearly every corner of the market over the past decade. The trend touched everything from mega-cap technology names to smaller international stocks. 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. That’s a gain of roughly 25%. That pattern held outside the largest U.S. tech stocks too, he noted. 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%.Building Income Without Chasing ValuationsThornburg’s flagship global equity income strategy, the Investment Income Builder Fund (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 Extends the Income Playbook to ETFsThat philosophy now has a newer, more liquid wrapper. The Thornburg Premium Income Builder ETF (THOR) launched on the New York Stock Exchange on June 22. The new ETF carries the same valuation-driven approach into an actively managed structure. See more: Thornburg Expands ETF Suite With New Premium Income Builder Fund 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. Top holdings include Kimberly-Clark Corp. (KMB), Orange S.A. (ORA) and TotalEnergies SE (TTE), according to Thornburg. The three are cash-generating dividend payers spanning consumer staples, telecommunications and energy, not concentrated in one sector. 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. Unlike option-income ETFs that mechanically sell calls against an index every month, THOR takes a different approach. Its overlay adjusts based on volatility and valuation, according to Thornburg. 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. For more news, information, and analysis, visit our Portfolio Strategies Content Hub.

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