Thornburg’s THOR ETF targets dividend income, avoids multiples

Thornburg launched the Thornburg Premium Income Builder ETF (THOR) on June 22 on the New York Stock Exchange. The actively managed ETF aims to generate global dividend income through bottom-up stock selection and an options overlay that the firm adjusts based on volatility and valuation measures.

A July report by Adam Sparkman in Thornburg’s client portfolio management group says much of the past decade’s market gains came from rising price-to-earnings multiples rather than stronger corporate earnings. The forward P/E of the MSCI World Index rose from about 15.3x to roughly 19.1x over ten years, an increase near 25%.

The report shows the pattern extended beyond U.S. large-cap tech stocks. The equal-weighted MSCI World Index saw about 16% multiple expansion, while the MSCI EAFE Index, which tracks developed markets outside North America, rose roughly 6% over the same period.

THOR holds a diversified mix of dividend-paying companies and applies a selective options overlay designed to boost income while aiming to preserve upside. Thornburg says the overlay is not a fixed monthly covered-call program; managers adjust coverage based on market volatility and valuations.

The ETF is benchmarked to the MSCI World Index, pays distributions quarterly and charges a total expense ratio of 0.79%. Top reported holdings at launch include Kimberly-Clark Corp., Orange S.A. and TotalEnergies SE, spanning consumer staples, telecommunications and energy sectors.

Thornburg cites its Investment Income Builder Fund (TIBIX) as a related strategy. Sparkman’s report shows TIBIX’s price-to-earnings multiple is lower today than it was a decade ago. The mutual fund’s annualized 10-year total return was 12.57%, compared with the MSCI World Index’s 13.06%, the equal-weighted MSCI World Index’s 9.32% and the MSCI EAFE Index’s 9.19%.

The report also notes downside characteristics for the mutual fund: over the trailing three years, TIBIX captured about 32.24% of the MSCI World Index’s decline. Thornburg presents THOR as a more liquid ETF version of that valuation-driven, income-focused approach, with active stock selection and a flexible options component.