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Gene Walden
Senior Finance Editor


Thrivent Limited Maturity Bond Fund seeks higher yields with lower risk

By Gene Walden, Senior Finance Editor | 10/20/2020


Investors seeking income have had some limited choices in recent years, with bond rates at historically low levels. But for investors in search of income, the Thrivent Limited Maturity Bond Fund (THLIX) may be an intriguing option. (See: Helping your clients with this alternative to money market funds)

Greg Anderson, vice president, fixed income, acknowledges that generally the higher the yield you want, the greater the risk you may need to take. But with THLIX, the objective is to flip the script.  “We want to be able to generate more yield than our peer group with less risk,” he said. “We try to do that in three ways:  sector allocation, duration and yield curve management, and security selection.”

The Fund is diversified across many sectors including securitized, corporate bonds and government bonds. “We’re looking at the areas of the market that offer the most yield for the least amount of risk,” added Anderson.

The Fund focuses on the “securitized” market – pools of loans and receivables typically in the consumer debt and mortgage areas. “Typically, these securities are issued from a bankruptcy remote trust, so unlike a corporate bond, you don’t have the risk of the whole issue defaulting,” he explained. “There may be specific loans within the trust that default, but you have a diversified pool of assets within a trust that mitigates the impact of a single default.”  (While diversification can help reduce market risk, it does not eliminate it. Diversification does not assure a profit or protect against loss in a declining market.)

Because of the uncertainty of the fixed income market,  the Fund managers have tried to take an approach that will work out best for the long term. ”We look for opportunities to increase the duration of the Fund, which typically gives us better yield,” explained Anderson. “If the global economy starts to pick up and get some traction, there is a lot of risk in long-term bonds. I think that the amount of yield you get in the Thrivent Limited Maturity Bond Fund for the amount of interest rate risk is pretty attractive relative to the market as a whole.”

The Fund primarily invests in investment-grade debt securities. The value of the Fund is influenced by factors impacting the overall market, debt securities in particular, and specific issuers. The Fund may incur losses due to investments that do not perform as anticipated by the investment adviser. Bond prices may decline during periods of rising interest rates. Credit risk is the risk that an issuer of a debt security may not pay its debt. The value of mortgage-related and other asset-backed securities will be influenced by the factors affecting the housing market and the assets underlying such securities. Collateralized debt obligations are subject to additional risks. In periods when dealer inventories of bonds are low in relation to market size, there is the potential for decreased liquidity and increased price volatility in the fixed income markets. These and other risks are described in the Fund prospectus.

All information and representations herein are as of 10/20/2020, 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.