Amid heightened economic uncertainty in the U.S., driven by ongoing trade disputes and concerns about the national budget deficit, a noteworthy investment strategy is gaining traction: expanding investment horizons globally. This shift is increasingly embraced by savvy investors and top-performing funds alike.
One standout example is the Thornburg Global Opportunities Fund, which actively seeks investment opportunities across international markets. Fund managers Miguel Oleaga and Brian McMahon leverage the flexibility offered by this global approach, focusing on international stocks that often present more appealing valuations compared to their U.S. counterparts.
Typically, global equity funds allocate about two-thirds of their assets to U.S. stocks. In contrast, the Thornburg fund inverts this trend, with approximately 63.5% of its portfolio invested in foreign equities. This approach has emerged as a potent strategy, yielding impressive returns that have consistently outpaced its benchmark over various time frames—over one year, three years, five years, and even a decade.
For instance, the fund has reported a total return of 14.54% through early June 2025, surpassing its category peers by over eight percentage points. This remarkable performance illustrates the benefits of a global investment strategy, particularly in a landscape where U.S. stocks have recently seen soaring valuations.
OLEAGA ON THE SHIFT TOWARD INTERNATIONAL MARKETS
When examining the current portfolio composition, Oleaga notes a significant shift toward foreign stocks, downplaying the previous balance between U.S. and international equities. This shift is not coincidental; it reflects the search for value where opportunities are more abundant. He argues that while the U.S. market exhibited commendable performance, many international stocks remain undervalued.
Identifying Opportunities Abroad
Investing outside the U.S. presents a wealth of potential, especially in companies focusing on efficient management and promising earnings growth. Oleaga and his team seek businesses with stable, improving returns and valuations that provide an appealing entry point.
Key attributes they look for include competitive advantages and the ability to enhance returns over time. The fund’s diligent approach involves understanding what the market requires and ensuring that the stocks they select exhibit solid potential for success.
Digital Transformation and Global Trends
Given the constraints on capital access in some regions, better management teams are optimizing operations, creating opportunities for investment. Firms are increasingly adopting robust business models from successful companies in the U.S. and replicating them in international markets. This strategic mindset enables businesses to tap into stable growth patterns, even if it’s not explosive.
The fund also scrutinizes the technology space, focusing broadly on communication services and tech companies outside the U.S. By identifying quality operators within specific value chains, Oleaga’s team can achieve favorable risk-reward balances, especially as sectors like cloud computing and AI continue to grow.
Long-Term Success and Flexibility
Flexibility and a consistent investment strategy remain central to the fund’s approach. Since its inception, it has adhered to a disciplined process of seeking quality companies while being mindful of the prices paid for them. Oleaga emphasizes that taking the time to monitor business progress is crucial; they wait for market conditions to create attractive buying opportunities rather than forcing investments.
For instance, in the retail space, the fund has benefited from investments in companies like TJX Companies, which capitalize on consumer demand for discounted goods while efficiently managing inventory.
Global Banking and Economic Growth
Looking ahead, Oleaga also sees potential in foreign banks, particularly those in rapidly growing economies. The Bank of Ireland illustrates this point—having successfully consolidated its market presence in a streamlined post-crisis landscape, the bank is poised for growth and offers an attractive valuation relative to its earnings potential.
The Broader Narrative: International Investing
With a long-term underweight in U.S. stocks, Oleaga feels that increased awareness of global opportunities is finally gaining traction among investors, particularly against the backdrop of evolving economic narratives. The fund’s ongoing focus on quality investments at prudent prices builds a solid foundation for enduring success.
By maintaining discipline, adaptability, and an unwavering commitment to quality, the Thornburg Global Opportunities Fund exemplifies how a global investment approach can unlock possibilities for enduring growth.
