During the first quarter, Thrivent Short-Term Bond Fund underperformed the Bloomberg U. S. Government/Credit 1-3 Year Bond Index by 0.09% as corporate markets priced in potential economic dislocations.
This underperformance was largely attributable to an overweight to corporates as spreads widened on concerns including the impact of AI and private credit exposure to software companies.
The most significant driver of the Fund's 12-month outperformance was a significant overweight to risk assets, which offered higher carry over the time period.
Thrivent Short-Term Bond Fund currently holds approximately 66% of its assets in corporate bonds, with an average ratings quality of Baa1/BBB+, which is still strongly investment-grade rated.
Since the beginning of the conflict in Iran and with oil prices above $100/barrel, the market is no longer pricing in cuts to the Fed Funds rate in 2026.
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Executive Summary
• During the first quarter, Thrivent Short-Term Bond Fund underperformed the Bloomberg U. S. Government/Credit 1-3 Year Bond Index by 0.09%. The quarter was marked by elevated volatility relative to the second half of 2025, as the
