In the fourth quarter of 2025, the Thornburg Core Plus Bond Fund, particularly its I share class, recorded a return of 1.06%, marginally trailing the Bloomberg U.S. Universal Index by 4 basis points. This period was characterized by fluctuating Treasury yields, notably a decline in short-term yields as anticipation for rate cuts grew. The fund's strategic positioning favored a longer duration and higher quality assets, influenced by appealing real yields and compressed credit spreads. This approach underscores a commitment to generating consistent income and mitigating risk over the long term, adapting to market shifts while maintaining a core investment philosophy.
The U.S. fixed income markets concluded 2025 with strong performance, largely propelled by actions from the Federal Reserve. This positive momentum highlights the intricate relationship between central bank policies and market dynamics. Investors observed a dynamic environment where economic indicators and policy decisions played crucial roles in shaping bond market trends. The shift in rate-cut expectations, for instance, directly influenced yield curves and investor sentiment, underscoring the importance of agile portfolio management.
Amidst this backdrop, the Thornburg Core Plus Bond Fund maintained its disciplined investment strategy. The decision to retain a longer duration and higher quality bias was not arbitrary but a calculated move based on the prevailing market conditions. Attractive real yields offered a buffer against inflation and enhanced income generation, while tight credit spreads indicated a favorable environment for high-quality debt instruments. This tactical positioning aimed to capitalize on market opportunities while safeguarding against potential downturns, reflecting a balanced approach to risk and reward.
Looking ahead, the fund's continued emphasis on generating attractive income and risk-adjusted total returns remains paramount. The volatile nature of financial markets necessitates a steadfast focus on fundamental value and a forward-thinking perspective. By closely monitoring economic developments and central bank communications, the fund endeavors to adjust its strategy to navigate future challenges and opportunities effectively.
The fourth quarter of 2025 served as a testament to the ongoing complexities and potential rewards within the fixed income landscape. For the Thornburg Core Plus Bond Fund, navigating these waters successfully involved a combination of strategic positioning, careful analysis of yield dynamics, and a persistent commitment to quality. This diligent approach is crucial for achieving long-term investment objectives in an ever-evolving market.