Now leaving ThriventFunds.com

 

You're about to visit a site that is neither owned nor operated by Thrivent Asset Management.

In the interest of protecting your information, we recommend you review the privacy policies at your destination site.

Financial Professional Site Registration

Complete this form to get full access to the entire financial professional site.

By clicking “Register”, you agree to our privacy and security policies and that you are a financial professional.

Access will be granted immediately, but the registration process may take up to 5 business days to complete.

Thank you for registering

You can now enjoy all financial professional content.

If your download does not start automatically, click here.

An error occurred

Please check back later.

FUND COMMENTARY

A diverse path to income: Thrivent Multidimensional Income Fund

08/16/2022

By Gene Walden, Senior Finance Editor | 08/16/2022

While most income funds are tethered largely to the bond market, Thrivent Multidimensional Income Fund (TMLDX) draws from a wide range of income-oriented investments in search of greater diversity and potentially better returns.

“Roughly 55% of the portfolio is exposed to what we call ‘the alternatives,’ which would include preferred securities, convertible bonds, closed-end funds, and some opportunistic equities that have higher dividend yields or some fixed income-type characteristics,” explains Grant Whitehorn, CFA, Fund Portfolio Manager.

In addition to its alternative investments, the Fund also shoots for higher yields by allocating about 34% of its assets to high yielding corporate bonds.

With a greater weighting of equity-like holdings, capital appreciation plays a greater role in the Fund’s total return than it would with traditional income funds. “For instance, convertible bonds have some bond characteristics, as well as conversion features to participate in the equity upside,” explains Whitehorn. “So that does create the potential for some additional capital gains in the Fund.”

Risk factors

While the broader range of investment components in the Fund offers greater potential for higher returns, it also introduces some additional areas of volatility and risk. “We’re not as sensitive to interest rate swings as traditional fixed-income funds, but we have more equity-like risk, so we still experience some volatility in terms of both price movement and dividend uncertainty,” explained Whitehorn. “But there is a trade-off because we’re getting compensated with some additional income and yield potential.”

The closed-end fund portion of the portfolio also adds some liquidity risk, said Whitehorn, “but we try to balance that out by also owning some fixed income ETFs, which demonstrated good liquidity during the recent crisis. We also limit our overall exposure to the riskier sectors.”

Interest rate swings

Whitehorn believes the diversification of the portfolio may put the Fund in a better position to weather a rise in rates than most other income funds.

“One of the key differences between traditional fixed income funds and Thrivent Multidimensional Income Fund is that because of our equity-like holdings, our portfolio is less sensitive to interest rate swings,” said Whitehorn. 

The multidimensional make-up of the Fund may help buffer the effects of economic forces such as interest rates, taxes and inflation, while providing more opportunity for total return in a strong equity market than traditional fixed-income funds.

For more on the Fund, see Thrivent Multidimensional Income Fund.

Gene Walden
Senior Finance Editor

A diverse path to income [PODCAST]



Past performance is not necessarily indicative of future results.

All information and representations herein are as of 08/16/2022, unless otherwise noted.

The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Thrivent Asset Management, LLC associates. Actual investment decisions made by Thrivent Asset Management, LLC will not necessarily reflect the views expressed. This information should not be considered investment advice or a recommendation of any particular security, strategy or product. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon, and risk tolerance.

Related insights

November 2022 Market Update

11/07/2022

Stocks stop skid while Fed keeps rates rising

Stocks stop skid while Fed keeps rates rising

Stocks stop skid while Fed keeps rates rising

Stocks made a strong rebound off recent lows in October, with the S&P 500 moving up about 8%. Bond yields also continued to climb as the Federal Reserve (Fed) ratcheted up its monetary tightening policy.

Stocks made a strong rebound off recent lows in October, with the S&P 500 moving up about 8%. Bond yields also continued to climb as the Federal Reserve (Fed) ratcheted up its monetary tightening policy.

11/07/2022