During the third quarter of 2025, the Thornburg Better World International Fund’s I share class recorded a return of 2.92%, which was 397 basis points below the MSCI ACWI ex-U.S. Index. This period saw international equities deliver mixed yet robust performance, influenced by shifting policy rates and fiscal policy debates. The U.S. Federal Reserve initiated a much-anticipated rate cut in September, reducing rates by 25 basis points, a move that resonated across global markets.
Key drivers of the portfolio's performance included excellent stock selection within the consumer staples sector, alongside strategic investments in information technology that benefited from both stock choice and favorable currency movements. From a geographical standpoint, astute stock selection in Korea played a crucial role. Moreover, the decision to maintain a zero-weight allocation in India, where market valuations appeared elevated, proved to be a significant positive factor for the fund's relative performance.
The strategic decisions made in portfolio construction, focusing on specific sectors and geographies, were instrumental in shaping the fund's outcome during a dynamic market environment. The emphasis on carefully chosen stocks in strong performing sectors and avoiding overvalued markets underscores a disciplined investment approach aimed at navigating complex global financial landscapes effectively.
In conclusion, the Thornburg Better World International Fund's third-quarter performance, despite trailing its benchmark, highlights the importance of active management and thoughtful allocation strategies in a complex global market. The fund's ability to identify opportunities in sectors like consumer staples and information technology, coupled with prudent geographical positioning, demonstrates a commitment to delivering value. This proactive approach to investing, prioritizing rigorous analysis and adaptive strategies, is essential for achieving sustained growth and navigating future market challenges.