The Thornburg Developing World Fund (I share class) recorded a 22.7% gain in the second quarter of 2026, trailing the MSCI Emerging Markets Index by 135 basis points. This performance occurred amidst a global economic landscape characterized by both enduring investor confidence and persistent vulnerabilities from prior supply shocks.
During this quarter, market indicators highlighted the sustained appeal of global risk assets, despite underlying fragility. The U.S. dollar maintained its strength, supported by relatively elevated U.S. interest rates and continuous capital flows into artificial intelligence and technology sectors. This robust dollar environment created headwinds for various non-U.S. currencies, impacting the fund's relative returns. The broader market experienced a mix of influences, where the immediate inflationary pressures stemming from the Iran conflict further contributed to the complex economic picture.
Amidst these intricate market conditions, understanding global economic indicators becomes paramount for navigating investment opportunities. The interplay of investor sentiment, currency valuations, and geopolitical events continues to shape the performance of emerging markets. Focusing on resilient businesses with strong earnings visibility, particularly in growth-oriented sectors like AI and technology, will be crucial for sustained success. Adaptability and strategic positioning are key to mitigating risks and capitalizing on emerging trends in an ever-evolving global financial landscape.
