Thornburg Blurs Lines Between Mutual Funds and ETFs with New Launch

SANTA FE, NM – April 01, 2026 – Thornburg Investment Management today launched a new type of investment product that merges the worlds of traditional mutual funds and exchange-traded funds (ETFs), a move that signals a significant evolution in the asset management industry. The Santa Fe-based firm, which oversees $57 billion in assets, announced that ETF share classes of two of its flagship active mutual funds are now trading on Nasdaq.

The new listings, Thornburg American Opportunities Fund (Nasdaq: TAOZ) and Thornburg Focus Growth Fund (Nasdaq: TFGZ), offer investors a novel way to access the firm's established, high-conviction strategies. This hybrid structure allows a single investment portfolio to offer both traditional mutual fund shares and ETF shares, which can be bought and sold throughout the day like a stock. While Thornburg is the first to list such actively managed products on Nasdaq, it joins a small but growing group of pioneers reshaping how investment strategies are packaged and delivered.

"We are pleased to offer clients a new and innovative way to access Thornburg's investment strategies," said Mark Zinkula, CEO of Thornburg, in a statement. "Extending these mutual funds into ETF share classes underscores our commitment to meeting evolving client demand with actively managed, high-conviction strategies grounded in fundamental research."

A New Chapter in Fund Structure

The launch represents a watershed moment for the fund industry, made possible by a recent shift in the regulatory landscape. For two decades, Vanguard was the sole firm permitted to use this dual-share structure, thanks to a patent that expired in 2023. Following its expiration, the Securities and Exchange Commission (SEC) began granting exemptive relief to other asset managers, leveling the playing field and unlocking a wave of potential innovation.

Dimensional Fund Advisors (DFA) became the first to bring an actively managed version of this structure to market in late 2025, setting a critical precedent. Thornburg's move confirms the burgeoning trend, with the firm being a significant early mover. The regulatory green light has prompted a flood of interest; as of March 2026, nearly 50 firms had received SEC approval to offer multi-class funds, with dozens more applications pending. This suggests that the hybrid model is poised to become a major force in the industry.

This structure aims to combine the best attributes of both vehicles. It allows an asset manager to leverage a successful mutual fund's existing portfolio, track record, and asset base while offering it in the more modern, and often more tax-efficient, ETF wrapper. By managing a single pool of assets, firms can achieve economies of scale and avoid the cost and complexity of launching entirely separate funds.

The Investor Calculus: Benefits and Trade-offs

For investors, the primary appeal of the ETF share class lies in its potential for greater tax efficiency and trading flexibility. Unlike mutual funds, which typically must sell securities and realize capital gains to meet redemptions, ETFs can redeem shares "in-kind" by exchanging a basket of underlying securities with an authorized participant. This process can significantly reduce or eliminate the taxable capital gains distributions passed on to shareholders—a benefit that extends to all investors in the fund, including those holding the mutual fund shares.

Furthermore, ETF shares offer intraday liquidity, allowing investors to trade them on an exchange at market-determined prices throughout the day. This contrasts with mutual funds, which are priced only once per day at their net asset value (NAV). Thornburg's new ETF shares also come with a lower cost; they are priced 16 basis points cheaper than the funds' lowest-cost mutual fund share classes, offering a direct expense saving.

However, this innovative structure is not without its complexities. Investors purchasing ETF shares will incur brokerage commissions, which are not typically associated with direct mutual fund purchases. There is also the risk that an ETF's market price can deviate from its underlying NAV, particularly during periods of market stress. Shareholders in the different classes will also have differing rights regarding how shares are purchased and redeemed, and how dividends are handled. Regulators require fund boards to closely monitor the structure to ensure that costs and benefits are allocated fairly between the two shareholder classes and that one group does not subsidize the other.

Reshaping the Competitive Landscape

Thornburg's strategic launch is a clear attempt to gain a competitive edge in an industry grappling with the ongoing shift from mutual funds to ETFs. With over $22 trillion still invested in mutual funds in the U.S., the ability to offer an ETF version of a popular fund provides a powerful tool to retain assets and attract new capital from investors who favor the ETF structure.

The move puts pressure on other active managers, particularly those who have been hesitant to enter the ETF space. Major players like BlackRock, Fidelity, and Morgan Stanley have already filed for similar exemptive relief, indicating a broad recognition that this hybrid model could become a new industry standard. The race is on to convert investor interest into actual assets.

While the regulatory hurdles have been cleared for many, operational readiness remains a key challenge. Supporting both mutual fund and ETF share classes within a single portfolio requires sophisticated trading, accounting, and distribution systems. The industry is adapting, with infrastructure providers like the Depository Trust & Clearing Corporation (DTCC) preparing to roll out automated solutions in May 2026 to facilitate conversions between mutual fund and ETF shares. This will likely accelerate adoption, but experts predict a gradual rollout rather than an overnight stampede as firms navigate the technical and business considerations.

Ultimately, Thornburg's launch is more than just a new product listing; it is a strategic bet on the future of fund design. By embracing this hybrid structure, the firm is positioning itself at the forefront of a trend that could fundamentally alter the active versus passive debate and redefine how investors access professional management for years to come.