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Thornburg says international stocks are improving for active ETFs
The firm points to a narrower S&P 500 participation, with only about one third of index members beating the gauge this year, plus higher overseas dividend yields.
Thornburg Investment Management says the case for international equities is strengthening as the U.S. market’s gains become concentrated in fewer stocks. The firm highlighted that only a third of S&P 500 companies are beating the index this year, the lowest share in more than 35 years, and that just a handful of artificial intelligence related names have driven much of the benchmark’s performance.
In Thornburg’s mid-year outlook published July 22, it argued that valuation and income differences make non-U.S. markets more attractive. The manager said international stocks trade near 14 times 2027 earnings, compared with 17 times for U.S. stocks, and that dividend yields abroad are running 2 to 3 percentage points higher than similar U.S. stocks.
Thornburg also framed the shift as a reason to prefer active management over passive international benchmarks, which it said have been pulled narrower by a semiconductor driven rally. The report argues passive approaches cannot selectively filter out weaker companies or tilt toward higher yielding holdings.
The firm’s ETF lineup reflecting that view includes the Thornburg International Equity ETF (TXUE) and the Thornburg Premium Income Builder ETF (THOR), both designed to pick individual stocks rather than track an index. The outlook also connected the U.S. growth picture to artificial intelligence spending, saying data center construction tied to AI is responsible for roughly half of U.S. economic growth, while the rest of the economy is expanding by about 1%.
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