In the second quarter of 2026, the Thornburg Better World International Fund's (I share class) investment portfolio yielded a return of 6.69%. This figure represents an underperformance of 780 basis points compared to its benchmark, the MSCI ACWI ex-U.S. Index. The period was characterized by a complex interplay of economic forces, with a robust global risk appetite persisting despite lingering vulnerabilities stemming from prior supply chain disruptions. The fund's strategy incorporates environmental, social, and governance (ESG) considerations not as rigid restrictions but as an analytical tool to uncover businesses with undervalued assets and strong, sustainable earning capabilities.

Thornburg Better World International Fund's Q2 Performance and Market Dynamics

During the second quarter of 2026, the global financial landscape witnessed a fascinating duality. The Thornburg Better World International Fund, specifically its I share class, reported a return of 6.69%. However, this trailed its benchmark, the MSCI ACWI ex-U.S. Index, by a significant margin of 780 basis points. The broader market environment, as observed by Thornburg Investment Management, showed a remarkable resilience in investors' willingness to take on risk. Yet, beneath this surface, the echoes of earlier supply shocks continued to create fragility within the economic system.

A key aspect of the Thornburg Better World International Fund's philosophy lies in its distinctive approach to ESG integration. Rather than treating ESG factors as a restrictive screen or constraint that might limit investment opportunities, the fund utilizes them as an additional lens for valuation. This method is designed to assist fund managers in identifying companies that may be mispriced by the market, particularly those with underappreciated sources of durable earnings power. By focusing on firms demonstrating strong governance, disciplined capital allocation, and improving ESG trajectories, the fund aims to build a high-conviction, diversified portfolio capable of navigating volatile market conditions and fostering long-term value creation.

This quarter's performance underscores the challenges inherent in global investing, especially when market dynamics are influenced by both optimism and underlying structural issues. It highlights the importance of an adaptive investment strategy that can discern genuine value and sustainability amidst evolving economic narratives.