Thornburg Income Builder Opportunities Trust Announces Distribution

Rhea-AI Summary

Thornburg Income Builder Opportunities Trust (TBLD) announced a monthly distribution of $0.10417 per share, payable on February 20, 2024, to common shareholders of record as of February 12, 2024. The distribution includes a short-term capital gain of $0.00994 and a return of capital of $0.06439. The Trust's investment objective is to provide current income and additional total return by investing in a broad range of income-producing securities.

Insights

Financial Analyst

The distribution announcement by Thornburg Income Builder Opportunities Trust outlines a consistent monthly distribution amount, which is a key factor for income-focused investors. The stability in distribution suggests a steady cash flow from the Trust's investments, which can be appealing for those seeking regular income streams. However, the composition of the distribution raises questions about the sustainability of the payouts. A significant portion of the distribution is classified as a return of capital, which indicates that some of the distributions are not sourced from the Trust's earnings but rather from the invested capital itself.

This could imply that the Trust's investments are not generating sufficient income, which might be concerning to shareholders focused on long-term capital preservation. It is important to monitor the trend of return of capital in the distributions as it may affect the Trust's share price if the market perceives the distributions to be unsustainable. The absence of long-term capital gains in the current distribution also suggests there may be limited growth in the Trust's portfolio, which could be a red flag for those seeking capital appreciation in addition to income.

Tax Advisor

From a tax perspective, the composition of the Trust's distributions is critical for shareholders. The inclusion of short-term capital gains, which are taxed at a higher rate than long-term capital gains, could result in a less favorable tax situation for investors. Additionally, the return of capital component of the distribution is not immediately taxable; however, it reduces the shareholder's cost basis in the investment, potentially resulting in higher capital gains taxes upon sale of the shares.

Investors should be aware that the Trust's distributions could lead to varied tax consequences and should consult with a tax professional to understand the impact on their individual tax situation. The Trust's commitment to providing specific tax characteristics on Form 1099 after the year-end is a helpful measure for shareholders to accurately report income and adjust their investment strategy accordingly.

Investment Strategist

Thornburg Income Builder Opportunities Trust's strategy of investing in a mix of income-producing securities globally could offer diversification benefits to shareholders. However, the Trust's exposure to emerging markets, capped at 20% of managed assets, introduces additional risk factors such as political instability, currency fluctuations and differing regulatory environments. These risks need to be balanced against the potential for higher yields and growth from these markets.

Investors should evaluate the Trust's distribution policy in the context of its overall investment strategy and performance. The use of return of capital to maintain distribution levels may not be inherently negative if it aligns with the Trust's total return objectives and if it is part of a strategic approach to managing cash flows and investment gains. However, it is crucial for investors to assess whether the Trust's portfolio is generating adequate returns to sustain distributions without eroding the principal over time.

SANTA FE, N.M., Feb. 1, 2024 /PRNewswire/ -- Thornburg Income Builder Opportunities Trust (the "Trust") (NASDAQ: TBLD) today announced a monthly distribution of $0.10417 per share on the Trust's common shares, payable on February 20, 2024 to common shareholders of record as of February 12, 2024.

The Trust's monthly distribution is shown below:

Amount	Payable Date	Ex-Dividend Date	Record Date	Change from Previous Declaration
$0.10417	February 20, 2024	February 9, 2024	February 12, 2024	No Change

 

Distribution rates are not performance and are calculated by summing the Trust's monthly distribution per share over four quarters and dividing by the net asset value or market price per share, as applicable, as of the distribution announcement date. Distributions on common shares are generally paid from net investment income (regular interest and dividends) and may also include capital gains and/or a return of capital. The Trust's distribution payable on February 20, 2024, does not include a long-term capital gain, but does include a short-term capital gain of $0.00994 and a return of capital of $0.06439. The specific tax characteristics of the distributions will be reported to the Trust's common shareholders on Form 1099 after the end of the 2024 calendar year. The final determination for all distributions paid in 2024 will be made in early 2025 and reported to you on Form 1099-DIV. You should not use this notice as a substitute for your 1099-DIV.

The Trust's fiscal year (10/01/2023 through 09/30/2024) cumulative distributions are shown below:

	Current Distribution	Cumulative Distributions FYTD
Net Investment Income	$0.02984 (29 %)	$0.16096 (31 %)
Net Realized Short-term Capital Gain	$0.00994 (10 %)	$0.07672 (15 %)
Net Realized Long-term Capital Gain	$0.00000 (0 %)	$0.08712 (17 %)
Return of Capital or Other Capital Sources	$0.06439 (61 %)	$0.19605 (37 %)
Total per share	$0.10417 (100 %)	$0.52085 (100 %)

 

Shareholders should not assume that the source of a distribution from the Trust is net income or profit. A distribution comprised in whole or in part by a return of capital does not necessarily reflect the Trust's investment performance and should not be confused with "yield" or "income." Future distributions may consist of a return of capital. For further information regarding the Trust's distributions, please visit www.thornburg.com/tbld-distributions.

The Trust's investment objective is to provide current income and additional total return. The Trust seeks to achieve its objective by investing, directly or indirectly, at least 80% of its managed assets in a broad range of income-producing securities. The Trust invests in both equity and debt securities of companies located in the United States and around the globe. The Trust may invest in non-U.S. domiciled companies, including up to 20% of its managed assets at the time of investment in equity and debt securities of emerging market companies.

As a registered investment company, the Trust is subject to a 4% excise tax that is imposed if the Trust does not distribute to common shareholders by the end of any calendar year at least the sum of (i) 98% of its ordinary income (not taking into account any capital gain or loss) for the calendar year and (ii) 98.2% of its capital gain in excess of its capital loss (adjusted for certain ordinary losses) for a one-year period generally ending on October 31 of the calendar year (unless an election is made to use the Trust's fiscal year). In certain circumstances, the Trust may elect to retain income or capital gain to the extent that the Board of Trustees, in consultation with Trust management, determines it to be in the interest of shareholders to do so.

The common share distributions paid by the Trust for any particular period may be more than the amount of net investment income from that period. As a result, all or a portion of a distribution may be a return of capital, which is in effect a partial return of the amount a common shareholder invested in the Trust, up to the amount of the common shareholder's tax basis in their common shares, which would reduce such tax basis. Although a return of capital may not be taxable, it will generally increase the common shareholder's potential gain, or reduce the common shareholder's potential loss, on any subsequent sale or other disposition of common shares.

About Thornburg

Thornburg Investment Management (Thornburg) is a global investment firm delivering on strategy for institutions, financial professionals and investors worldwide. The privately held firm, founded in 1982, is an active, high-conviction manager of equities, fixed income and multi-asset solutions. With $43 billion¹ in client assets as of December 31, 2023, the firm offers mutual funds, closed-end funds, institutional accounts, separate accounts and UCITS funds for non-U.S. investors.

As an independent firm, Thornburg can take on a wide range of opportunities, explore ideas thoroughly and work across strategies to deliver consistent risk-adjusted outperformance over the long term. The firm attracts free-thinking professionals who are eager to pursue investment outcomes beyond the confines of popular wisdom. From nimble operational capabilities to principles and actions fitting of a global citizen, Thornburg's world-class investment platform and team are aligned on strategy to serve investors.

Thornburg's U.S. headquarters is in Santa Fe, New Mexico with offices in Hong Kong and Shanghai. For more information, visit www.thornburg.com or call 877 215 1330.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any offer, solicitation or sale of any securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction. A registration statement relating to these securities has been filed with and declared effective by the U.S. Securities and Exchange Commission.

Certain statements in this press release constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Trust, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the Trust nor any other person assumes responsibility for the accuracy and completeness of such statements in the future.

Risk is inherent in all investing. There can be no assurance that the Trust will achieve its investment objective, and you could lose some or all of your investment.

Thornburg Securities LLC, member FINRA, is a wholly owned subsidiary of Thornburg Investment Management, Inc.

NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

Media Inquiries 
Michael Corrao
Director of Global Communications
Thornburg Investment Management
Tel: +1 505 467 5345
Email: mcorrao@thornburg.com

¹ Includes $42 billion in assets under management and $1 billion in assets under advisement as of December 31, 2023.

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SOURCE Thornburg Investment Management

FAQ

What is the monthly distribution announced by Thornburg Income Builder Opportunities Trust (TBLD)?

The Trust announced a monthly distribution of $0.10417 per share, payable on February 20, 2024, to common shareholders of record as of February 12, 2024.

What is included in the distribution payable on February 20, 2024?

The distribution includes a short-term capital gain of $0.00994 and a return of capital of $0.06439.

What is Thornburg Income Builder Opportunities Trust's (TBLD) investment objective?

The Trust's investment objective is to provide current income and additional total return by investing in a broad range of income-producing securities.

What is the excise tax imposed on Thornburg Income Builder Opportunities Trust (TBLD)?

The Trust is subject to a 4% excise tax if it does not distribute to common shareholders by the end of any calendar year at least the sum of 98% of its ordinary income and 98.2% of its capital gain.