Thornburg Investment Management Review

Disciplinary Questions

After checking the disciplinary records of Thornburg Investment Management, our system has identified the following question(s) to ask. Learn more.

announcement Your firm or an advisory affiliate has previously been found guilty of violating a regulation or statute by a domestic or foreign court, the SEC, CFTC, or another regulatory body or commodities exchange. What happened? When? How many times did it occur? Will anyone that was involved be involved with my accounts in any capacity?

Our system found no other disciplinary questions to ask. Checks take place monthly.

Conflict Questions

After checking the regulatory records of Thornburg Investment Management, our system has identified the following question(s) to ask. Learn more.

announcement Is your firm also a Broker-Dealer or are they affiliated with one? What conflicts arise from this relationship? How do you mitigate them?

Why ask? Currently this firm is also a Broker-Dealer or is affiliated with one. When firms are dual-registered as broker-dealers, they may be subject to compensation-related conflicts of interest, including revenue sharing from mutual funds, cross-selling of commissioned insurance products, and the sale of proprietary investment products. All of these conflicts can negatively impact clients via hidden fees and overall higher costs.

announcement Do you offer mutual funds that have 12b-1 fees?

Why ask? 12b-1 fees increase the total annual cost of owning a mutual fund with no guarantee of higher returns. Some firms receive these fees as payments, which creates an incentive to promote them.

announcement Do you offer products that have performance-based fees, or do you accept performance-based fees? Will any of my assets be invested in those products?

Why ask? When performance-based fees are charged, the financial advisor is paid for outperforming a benchmark, typically an index. While this may seem like an attractive compensation structure to ensure your advisor is making your money work for you, often, the managers of those products are incentivized to take inappropriate risks to beat their performance benchmark. For instance, research has shown that mutual funds that use incentive fees take on more risk that funds that do not, and tend to double down and increase their risk following a poor performance. This could be detrimental to a client during down markets.

announcement Do you perform side-by-side management? How do you mitigate conflicts that arise from managing accounts with differing fee structures?

Why ask? This typically occurs when firms manage mutual funds or hedge funds alongside smaller retail accounts. Side-by-side management can create an incentive for the advisor to favor the larger funds, potentially leading to unequal trading costs and unfavorable trade executions for their retail clients.

announcement Do you accept soft-dollar benefits? How did these benefits affect your firm’s selection of a broker-dealer partner?

Why ask? This firm receives soft-dollar benefits that could incentivize them to push trades through broker-dealers that provide advantages to the firm instead of through broker-dealers that could provide the best trade execution for their clients.

announcement Which securities do you trade for yourself that you will also be recommending to me?

Why ask? This firm has marked in their disclosures that they trade recommended securities. While this often can be seen as "eating your own cooking," there are several inherent conflicts that can arise. For example, front running is when a financial professional buys or sell securities ahead of their client. In short, any financial professional should disclose all positions they hold (or have sold short) that they will also be recommending to you.

Our system found no other conflict questions to ask. Checks take place monthly.