Correspondence 0001999371-25-002793 from THORNBURG INVESTMENT TRUST (CIK 0000816153)
THORNBURG INVESTMENT TRUST (CIK 0000816153)
Date: March 18, 2025 · CIK: 0000816153 · Accession: 0001999371-25-002793
AI Filing Summary & Sentiment
File numbers found in text: 811-05201
Letter
Via EDGAR correspondence and E-Mail Division of Investment Management, Disclosure Review Office Washington, D.C. 20549 Re: Thornburg Investment Trust Registration Number under the Securities Act of 1933: 33-14905 Registration Number under the Investment Company Act of 1940: 811-05201
Dear Ms. Browning:
I state below the above-referenced registrant’s responses to the comments received from the staff of the U.S. Securities and Exchange Commission (“SEC”) on February 26, 2025 respecting post-effective amendment number 156 (“PEA 156”) to the registrant’s Form N-1A registration statement (the “Registration Statement”), filed via EDGAR on January 10, 2025, and applicable to the Thornburg Investment Grade Bond Managed Account Fund (the “Investment Grade Fund”) and the Thornburg High Income Bond Managed Account Fund (the “High Income Fund”). Each of the Investment Grade Fund and the High Income Fund is also sometimes referred to individually in this letter as the “Fund,” and are collectively referred to as the “Funds”.
The revisions to the Registration Statement that are described below are expected to be made, in substantially the same form described, in the registrant’s post-effective amendment which is to be filed on or about March 25, 2025 and is to be effective on or about March 26, 2025 (hereinafter, the “485B Filing”). In those instances where we identify disclosure items analogous to the items that were specific subjects of staff comments, and the registrant responds to those comments by revisions to the disclosures referenced in staff comments, we expect to make conforming revisions to the analogous disclosures.
General Comments
1. The staff noted the staff’s pronouncement on October 5, 2016 that the registrant and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.
Response: The registrant and its management acknowledge their responsibilities related to the Registration Statement disclosure.
460 St. Michael’s Drive E-mail: dan_april@catchlaw.com Tel.: (505) 988-2900
Suite 603 Website: www.catchlaw.com Extension 103
Santa Fe, New Mexico 87505
Fax: (505) 988-2901
March 19, 2025
Page 2
2. The staff asked the registrant to confirm that incomplete information or information not available at the time PEA 156 was filed will be included in the next post-effective amendment to the Registration Statement.
Response: The registrant will include in the 485B Filing all required information omitted from PEA 156.
Prospectus Comments
3. The staff asked the registrant to revise footnote 3 to each Fund’s annual fund operating expenses table to state that the contractual undertaking of the Funds’ advisor (“Thornburg”) to waive or reimburse certain Fund fees and expenses will remain in place for at least one year and that, during that one-year period, the undertaking cannot be terminated without approval of the Funds’ Board of Trustees. The staff also asked the registrant to confirm supplementally that Thornburg does not have the right to recoup amounts that are waived and reimbursed pursuant to this contractual undertaking.
Response: Thornburg has contractually undertaken to waive or reimburse Fund fees and expenses to the level shown in the Funds’ operating expenses tables for the entire period that the Funds are in operation. Accordingly, the registrant expects that the waivers or reimbursements will be in place for far longer than one year. Nonetheless, in response to the staff’s comment, the registrant will make the requested revisions, modifying the referenced footnote for each Fund to read substantially as follows:
“Thornburg has contractually agreed to waive, pay or reimburse all expenses of the Fund, except for taxes, interest expense, acquired fund fees and expenses, brokerage commissions, borrowing costs, expenses relating to short sales, and unusual expenses such as contingency fees or litigation costs. The agreement to waive fees and reimburse expenses may be terminated by the Fund’s Trustees at any time, but may not be terminated by Thornburg before March 26, 2026, unless Thornburg ceases to be the investment advisor of the Fund prior to that date.”
The registrant also confirms that Thornburg does not have the right to recoup amounts that are waived or reimbursed pursuant to its contractual undertaking.
4. The staff noted that the Investment Grade Fund has a principal investment strategy to invest, under normal conditions, at least 80% of its net assets in debt obligations which are rated by a nationally recognized statistical rating organization at the time of purchase as investment grade or, if unrated, are issued by obligors that Thornburg determines have comparable investment grade obligations outstanding or that are deemed by Thornburg to be comparable to obligors with outstanding investment grade obligations. The staff made the following comments with respect to that investment strategy:
(a) Clarify what is meant by the reference to obligors with investment grade obligations that are “outstanding.”
(b) Define the term “investment grade.” The staff noted that the registrant could include a brief definition of this term in the disclosure that is responsive to item 4 of Form N-1A and include additional detail in the disclosure that is responsive to item 9 of Form N-1A. The staff also asked the registrant to clarify that the Fund’s investments in investment grade obligations may include investments in obligations that are assigned any of the four investment grade ratings, and that the Fund is not limited in buying only the highest rated investment grade obligations.
April, Dolan & Koehler, P.C. Attorneys and Counselors at Law
March 19, 2025
Page 3
(c) Disclose the Investment Grade Fund’s policy with respect to debt obligations that are downgraded after being purchased by the Fund. Specifically, the staff asked the registrant to clarify whether the Fund would continue to count obligations that were investment grade at the time of purchase but are subsequently downgraded to below investment grade toward the Fund’s policy of investing at least 80% in investment grade obligations, or whether the Fund would sell such obligations or not count them toward the Fund’s 80% policy.
(d) Revise the definition of the term “net assets” that appears in the prospectus to align with the definition of “assets” used in rule 35d-1(g) of the Investment Company Act of 1940 (the “1940 Act”).
Response: The registrant’s responses to each of the foregoing comments are as follows:
(a) The registrant believes that the word “outstanding,” as used in the referenced sentence, is sufficiently clear. The registrant notes that the plain meaning of the word informs investors that, if an obligation is unrated by a nationally recognized statistical rating organization, then Thornburg will assess whether the obligation is investment grade by comparing it to other debt obligations that are currently available in the marketplace. The registrant therefore respectfully declines to revise or replace the word “outstanding.” The registrant has, however, determined to make the referenced sentence easier to read and understand by breaking it into two sentences. See subclause (b) below.
(b) The registrant will break up the second sentence under the item 4 disclosure of the Investment Grade Fund’s principal investment strategies into two sentences. The second of those two sentences will define the term “investment grade” and, consistent with the staff’s request, that definition will note that an investment grade obligation includes those rated in one of the top four ratings categories by a nationally recognized statistical rating organization. The revised disclosure will appear substantially as follows:
“Under normal conditions, the Fund invests at least 80% of its net assets in investment grade debt obligations. “Investment grade” obligations are those which, at the time of purchase by the Fund, are rated in one of the top four ratings categories by a nationally recognized statistical rating organization or, if unrated, are issued by obligors that Thornburg determines have comparable investment grade obligations outstanding or that are deemed by Thornburg to be comparable to obligors with outstanding investment grade obligations.”
The registrant will also update the disclosure in the portion of the prospectus which is responsive to item 9 of Form N-1A to explain that the nationally recognized statistical ratings organizations to which the registrant may look to evaluate an obligation’s credit rating include Moody’s Investors Services, S&P Global Ratings, Fitch Ratings Inc., and Kroll Bond Rating Agency, that “investment grade” ratings from those services include ratings of Baa or BBB or better, and that obligations assigned the lowest of the four investment grade ratings may have speculative characteristics and may be more vulnerable to adverse economic conditions than more highly rated obligations. The registrant will accomplish those item 9 disclosure changes in part by relocating certain language that currently appears under the subheading “Risks Affecting Lower Quality Debt Securities” to appear instead under the heading subheading “Credit and Specific Issuer Risks.” See the registrant’s response to comment 20 below for more information about the specific changes the registrant will make to the item 9 disclosure about credit ratings.
April, Dolan & Koehler, P.C. Attorneys and Counselors at Law
March 19, 2025
Page 4
(c) With respect to the staff’s comment about downgraded debt obligations, the registrant will add the following disclosure in the portion of the prospectus that is responsive to item 9 of Form N-1A, as a new paragraph under the heading “Credit and Specific Issuer Risks.”
“As noted in the first part of this Prospectus, the Investment Grade Bond Managed Account Fund pursues a principal investment strategy of investing, under normal conditions, at least 80% of its net assets in investment grade debt obligations, which could include obligations that fall within any of the four highest credit ratings assigned by an NRSRO or, if unrated, are determined by Thornburg to be comparable to such obligations. The Investment Grade Bond Managed Account Fund will review its portfolio at least quarterly to confirm that it remains in compliance with that 80% policy, and if the Fund determines that it is out of compliance with the policy, it will take steps to remedy that noncompliance within the time periods required by applicable rules under the Investment Company Act of 1940. At times, an obligation that was investment grade when purchased by the Investment Grade Bond Fund could be subsequently downgraded to below investment grade. While the Investment Grade Bond Fund is not required to sell such downgraded obligation, those obligations will not be counted toward compliance with the Fund’s 80% policy.”
The registrant does not believe it is currently likely that more than ten percent of any Fund’s investments in debt obligations will be downgraded to below investment grade status subsequent to the Fund’s purchase, and so the registrant believes that it is sufficient to add the foregoing item 9 disclosure without also needing to add disclosure about downgraded obligations to the Funds’ item 4 disclosures.
(d) The registrant will make the requested revision to the definition of the term “net assets.” The registrant will make this change by deleting the separate definition of “net assets” that currently appears in the item 4 disclosure for each Fund, and by revising the item 4 disclosure which references each Fund’s 80% investing policy to say that the policy applies to the Fund’s net assets “plus the amount of borrowings for investment purposes.”
5. The staff asked whether the Investment Grade Fund may, as a principal investment strategy, invest in below investment grade obligations. If so, the registrant asked the Fund to include disclosure in the portion of the prospectus that is responsive to item 4 of Form N-1A, explaining that the Fund may invest in below investment grade obligations and also describing the principal risks associated with such investments.
Response: The registrant does not currently expect that the Investment Grade Fund will invest in below investment grade obligations as a principal investment strategy. The registrant will, however, monitor the extent of the Investment Grade Fund’s investments in below investment grade obligations, and if such investments become a principal part of the Fund’s investment strategies, the registrant will update its prospectus disclosures to describe that strategy and its attendant risks.
6. The staff asked the registrant to clarify if each type of debt obligation that appears in the bulleted list in the item 4 disclosure about the Investment Grade Fund’s principal investment strategies would be counted toward the Fund’s strategy of investing at least 80% of its net assets in investment grade obligations. Relatedly, the staff asked the registrant to specify what types of obligations might be held by the Investment Grade Fund that would not count toward that 80% basket of investment grade obligations, and if any of those other investments could be a principal investment strategy of the Fund, the staff asked the registrant to disclose those investments in the item 4 portion of the prospectus and to describe their attendant risks. Finally, the staff asked the registrant to remove the word “typically” in the introductory language before the bulleted list.
April, Dolan & Koehler, P.C. Attorneys and Counselors at Law
March 19, 2025
Page 5
Response: The bulleted list is intended to describe the specific types of debt obligations in which the Investment Grade Fund will invest as a principal investment strategy. Whether or not any such investment would count toward the Fund’s 80% policy of investing in investment grade obligations will depend on whether the investment itself is investment grade. For example, if the Fund invests in an investment grade corporate debt obligation, then that corporate debt obligation will be counted toward the Fund’s 80% policy. On the other hand, if the Fund invests in a corporate debt obligation that is not investment grade, then that corporate debt obligation will not count toward the Fund’s 80% policy. Currently, each of the types of obligations referenced in the bulleted list could constitute a principal investment strategy of the Fund.
Regarding the staff’s request to remove the word “typically,” the Fund will revise the introductory language before the bulleted list to read substantially as follows:
“The Fund will invest principally in the following types of debt obligations:”
7. The staff asked the registrant to disclose whether there is a maximum limit to either Fund’s investments in mortgage- and asset-backed securities, collateralized mortgage obligations (“CMOs”), collateralized debt obligation (“CDOs”), collateralized bond obligations (“CBOs”), and collateralized loan obligations (“CLOs”) that are rated as below investment grade. Similarly, the staff asked the registrant to disclose whether there is a maximum limit to the High Income Fund’s investments in bank loans that are rated as below investment grade. If either Fund could invest more than 15% of its net assets in such investments, th
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filename1.htm
Attorneys and Counselors at
Law
Daniel H. April
Patrick J. Dolan
Megan H. Koehler
March 19, 2025
Via EDGAR correspondence and E-Mail
Kimberly Browning
U.S. Securities and Exchange Commission
Division of Investment Management, Disclosure
Review Office
100 F Street N.E.
Washington, D.C. 20549
Re: Thornburg Investment Trust
Registration
Number under the Securities Act of 1933: 33-14905
Registration
Number under the Investment Company Act of 1940: 811-05201
Dear Ms. Browning:
I state below the above-referenced
registrant’s responses to the comments received from the staff of the U.S. Securities and Exchange Commission (“SEC”)
on February 26, 2025 respecting post-effective amendment number 156 (“PEA 156”) to the registrant’s Form N-1A registration
statement (the “Registration Statement”), filed via EDGAR on January 10, 2025, and applicable to the Thornburg Investment
Grade Bond Managed Account Fund (the “Investment Grade Fund”) and the Thornburg High Income Bond Managed Account Fund (the
“High Income Fund”). Each of the Investment Grade Fund and the High Income Fund is also sometimes referred to individually
in this letter as the “Fund,” and are collectively referred to as the “Funds”.
The revisions to the Registration
Statement that are described below are expected to be made, in substantially the same form described, in the registrant’s post-effective
amendment which is to be filed on or about March 25, 2025 and is to be effective on or about March 26, 2025 (hereinafter, the “485B
Filing”). In those instances where we identify disclosure items analogous to the items that were specific subjects of staff comments,
and the registrant responds to those comments by revisions to the disclosures referenced in staff comments, we expect to make conforming
revisions to the analogous disclosures.
General Comments
1. The staff noted the staff’s pronouncement on October 5, 2016 that the registrant and its management are responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.
Response: The registrant
and its management acknowledge their responsibilities related to the Registration Statement disclosure.
460 St. Michael’s Drive
E-mail: dan_april@catchlaw.com
Tel.: (505) 988-2900
Suite 603
Website: www.catchlaw.com
Extension 103
Santa Fe, New Mexico 87505
Fax: (505) 988-2901
March 19, 2025
Page 2
2. The staff asked the registrant to confirm that incomplete information or information not available at the time PEA 156 was filed
will be included in the next post-effective amendment to the Registration Statement.
Response: The registrant
will include in the 485B Filing all required information omitted from PEA 156.
Prospectus Comments
3. The staff asked the registrant to revise footnote 3 to each Fund’s annual fund operating expenses table to state that the
contractual undertaking of the Funds’ advisor (“Thornburg”) to waive or reimburse certain Fund fees and expenses will
remain in place for at least one year and that, during that one-year period, the undertaking cannot be terminated without approval of
the Funds’ Board of Trustees. The staff also asked the registrant to confirm supplementally that Thornburg does not have the right
to recoup amounts that are waived and reimbursed pursuant to this contractual undertaking.
Response: Thornburg has
contractually undertaken to waive or reimburse Fund fees and expenses to the level shown in the Funds’ operating expenses tables
for the entire period that the Funds are in operation. Accordingly, the registrant expects that the waivers or reimbursements will be
in place for far longer than one year. Nonetheless, in response to the staff’s comment, the registrant will make the requested revisions,
modifying the referenced footnote for each Fund to read substantially as follows:
“Thornburg has contractually
agreed to waive, pay or reimburse all expenses of the Fund, except for taxes, interest expense, acquired fund fees and expenses, brokerage
commissions, borrowing costs, expenses relating to short sales, and unusual expenses such as contingency fees or litigation costs. The
agreement to waive fees and reimburse expenses may be terminated by the Fund’s Trustees at any time, but may not be terminated by
Thornburg before March 26, 2026, unless Thornburg ceases to be the investment advisor of the Fund prior to that date.”
The registrant also confirms that
Thornburg does not have the right to recoup amounts that are waived or reimbursed pursuant to its contractual undertaking.
4. The staff noted that the Investment Grade Fund has a principal investment strategy to invest, under normal conditions, at least
80% of its net assets in debt obligations which are rated by a nationally recognized statistical rating organization at the time of purchase
as investment grade or, if unrated, are issued by obligors that Thornburg determines have comparable investment grade obligations outstanding
or that are deemed by Thornburg to be comparable to obligors with outstanding investment grade obligations. The staff made the following
comments with respect to that investment strategy:
(a) Clarify what is meant by the reference to obligors with investment grade obligations that are “outstanding.”
(b) Define the term “investment grade.” The staff noted that the registrant could include a brief definition of this term
in the disclosure that is responsive to item 4 of Form N-1A and include additional detail in the disclosure that is responsive to item
9 of Form N-1A. The staff also asked the registrant to clarify that the Fund’s investments in investment grade obligations may include
investments in obligations that are assigned any of the four investment grade ratings, and that the Fund is not limited in buying only
the highest rated investment grade obligations.
April, Dolan & Koehler, P.C. Attorneys
and Counselors at Law
March 19, 2025
Page 3
(c) Disclose the Investment Grade Fund’s policy with respect to debt obligations that are downgraded after being purchased by
the Fund. Specifically, the staff asked the registrant to clarify whether the Fund would continue to count obligations that were investment
grade at the time of purchase but are subsequently downgraded to below investment grade toward the Fund’s policy of investing at
least 80% in investment grade obligations, or whether the Fund would sell such obligations or not count them toward the Fund’s 80%
policy.
(d) Revise the definition of the term “net assets” that appears in the prospectus to align with the definition of “assets”
used in rule 35d-1(g) of the Investment Company Act of 1940 (the “1940 Act”).
Response: The registrant’s
responses to each of the foregoing comments are as follows:
(a) The registrant believes that the word “outstanding,” as used in the referenced sentence, is sufficiently clear. The
registrant notes that the plain meaning of the word informs investors that, if an obligation is unrated by a nationally recognized statistical
rating organization, then Thornburg will assess whether the obligation is investment grade by comparing it to other debt obligations that
are currently available in the marketplace. The registrant therefore respectfully declines to revise or replace the word “outstanding.”
The registrant has, however, determined to make the referenced sentence easier to read and understand by breaking it into two sentences.
See subclause (b) below.
(b) The registrant will break up the second sentence under the item 4 disclosure of the Investment Grade Fund’s principal investment
strategies into two sentences. The second of those two sentences will define the term “investment grade” and, consistent with
the staff’s request, that definition will note that an investment grade obligation includes those rated in one of the top four ratings
categories by a nationally recognized statistical rating organization. The revised disclosure will appear substantially as follows:
“Under normal conditions, the
Fund invests at least 80% of its net assets in investment grade debt obligations. “Investment grade” obligations are those
which, at the time of purchase by the Fund, are rated in one of the top four ratings categories by a nationally recognized statistical
rating organization or, if unrated, are issued by obligors that Thornburg determines have comparable investment grade obligations outstanding
or that are deemed by Thornburg to be comparable to obligors with outstanding investment grade obligations.”
The registrant will also update the disclosure
in the portion of the prospectus which is responsive to item 9 of Form N-1A to explain that the nationally recognized statistical ratings
organizations to which the registrant may look to evaluate an obligation’s credit rating include Moody’s Investors Services,
S&P Global Ratings, Fitch Ratings Inc., and Kroll Bond Rating Agency, that “investment grade” ratings from those services
include ratings of Baa or BBB or better, and that obligations assigned the lowest of the four investment grade ratings may have speculative
characteristics and may be more vulnerable to adverse economic conditions than more highly rated obligations. The registrant will accomplish
those item 9 disclosure changes in part by relocating certain language that currently appears under the subheading “Risks Affecting
Lower Quality Debt Securities” to appear instead under the heading subheading “Credit and Specific Issuer Risks.” See
the registrant’s response to comment 20 below for more information about the specific changes the registrant will make to the item
9 disclosure about credit ratings.
April, Dolan & Koehler, P.C. Attorneys
and Counselors at Law
March 19, 2025
Page 4
(c) With respect to the staff’s comment about downgraded debt obligations, the registrant will add the following disclosure in
the portion of the prospectus that is responsive to item 9 of Form N-1A, as a new paragraph under the heading “Credit and Specific
Issuer Risks.”
“As noted in the first part
of this Prospectus, the Investment Grade Bond Managed Account Fund pursues a principal investment strategy of investing, under normal
conditions, at least 80% of its net assets in investment grade debt obligations, which could include obligations that fall within any
of the four highest credit ratings assigned by an NRSRO or, if unrated, are determined by Thornburg to be comparable to such obligations.
The Investment Grade Bond Managed Account Fund will review its portfolio at least quarterly to confirm that it remains in compliance with
that 80% policy, and if the Fund determines that it is out of compliance with the policy, it will take steps to remedy that noncompliance
within the time periods required by applicable rules under the Investment Company Act of 1940. At times, an obligation that was investment
grade when purchased by the Investment Grade Bond Fund could be subsequently downgraded to below investment grade. While the Investment
Grade Bond Fund is not required to sell such downgraded obligation, those obligations will not be counted toward compliance with the Fund’s
80% policy.”
The registrant does not believe it is currently
likely that more than ten percent of any Fund’s investments in debt obligations will be downgraded to below investment grade status
subsequent to the Fund’s purchase, and so the registrant believes that it is sufficient to add the foregoing item 9 disclosure without
also needing to add disclosure about downgraded obligations to the Funds’ item 4 disclosures.
(d) The registrant will make the requested revision to the definition of the term “net assets.” The registrant will make
this change by deleting the separate definition of “net assets” that currently appears in the item 4 disclosure for each Fund,
and by revising the item 4 disclosure which references each Fund’s 80% investing policy to say that the policy applies to the Fund’s
net assets “plus the amount of borrowings for investment purposes.”
5. The staff asked whether the Investment Grade Fund may, as a principal investment strategy, invest in below investment grade obligations.
If so, the registrant asked the Fund to include disclosure in the portion of the prospectus that is responsive to item 4 of Form N-1A,
explaining that the Fund may invest in below investment grade obligations and also describing the principal risks associated with such
investments.
Response: The registrant
does not currently expect that the Investment Grade Fund will invest in below investment grade obligations as a principal investment strategy.
The registrant will, however, monitor the extent of the Investment Grade Fund’s investments in below investment grade obligations,
and if such investments become a principal part of the Fund’s investment strategies, the registrant will update its prospectus disclosures
to describe that strategy and its attendant risks.
6. The staff asked the registrant to clarify if each type of debt obligation that appears in the bulleted list in the item 4 disclosure
about the Investment Grade Fund’s principal investment strategies would be counted toward the Fund’s strategy of investing
at least 80% of its net assets in investment grade obligations. Relatedly, the staff asked the registrant to specify what types of obligations
might be held by the Investment Grade Fund that would not count toward that 80% basket of investment grade obligations, and if any of
those other investments could be a principal investment strategy of the Fund, the staff asked the registrant to disclose those investments
in the item 4 portion of the prospectus and to describe their attendant risks. Finally, the staff asked the registrant to remove the word
“typically” in the introductory language before the bulleted list.
April, Dolan & Koehler, P.C. Attorneys
and Counselors at Law
March 19, 2025
Page 5
Response: The bulleted
list is intended to describe the specific types of debt obligations in which the Investment Grade Fund will invest as a principal investment
strategy. Whether or not any such investment would count toward the Fund’s 80% policy of investing in investment grade obligations
will depend on whether the investment itself is investment grade. For example, if the Fund invests in an investment grade corporate debt
obligation, then that corporate debt obligation will be counted toward the Fund’s 80% policy. On the other hand, if the Fund invests
in a corporate debt obligation that is not investment grade, then that corporate debt obligation will not count toward the Fund’s
80% policy. Currently, each of the types of obligations referenced in the bulleted list could constitute a principal investment strategy
of the Fund.
Regarding the staff’s
request to remove the word “typically,” the Fund will revise the introductory language before the bulleted list to read substantially
as follows:
“The Fund will invest
principally in the following types of debt obligations:”
7. The staff asked the registrant to disclose whether there is a maximum limit to either Fund’s investments in mortgage- and
asset-backed securities, collateralized mortgage obligations (“CMOs”), collateralized debt obligation (“CDOs”),
collateralized bond obligations (“CBOs”), and collateralized loan obligations (“CLOs”) that are rated as below
investment grade. Similarly, the staff asked the registrant to disclose whether there is a maximum limit to the High Income Fund’s
investments in bank loans that are rated as below investment grade. If either Fund could invest more than 15% of its net assets in such
investments, th