Thrivent Money Market Fund Q2 2026 Insights and Outlook

Fund Management OverviewThe Thrivent Money Market Fund operates under the guidance of experienced professionals including John Northup who holds the CFA designation and serves as a senior portfolio manager with extensive industry experience dating back to the year 2001 along with involvement in this

Fund Management Overview

The Thrivent Money Market Fund operates under the guidance of experienced professionals including John Northup who holds the CFA designation and serves as a senior portfolio manager with extensive industry experience dating back to the year 2001 along with involvement in this specific fund starting in 2026. This leadership team focuses on maintaining stability and optimizing returns within the constraints of money market objectives while navigating evolving market conditions throughout the second quarter of 2026.

Important Highlights from the Quarter

Federal Reserve Governor Warsh conducted his initial meeting in the role of chair at the Federal Reserve where interest rates remained steady yet the overarching signal emphasized a strong commitment to addressing inflation within the dual mandate. Following the associated press conference nearly two anticipated rate increases became reflected in market pricing. This development presented a valuable chance for the fund to strategically secure elevated yields on shorter term fixed income instruments given the emergence of a more pronounced yield curve slope. Additional prospects arose in term based secured overnight financing rate agency instruments that displayed improved pricing dynamics during the latter portion of the quarter under review. The core approach involves methodically incorporating fixed rate positions when they align with break even evaluations based on projected Federal Funds Rate trajectories while also extending allocations into floating rate holdings at currently advantageous market valuations. At present the fund maintains a balanced stance relative to comparable peers with a weighted average maturity of 38 days and a weighted average life of 99 days which provides considerable flexibility for adjustments as needed.

Elements Influencing Performance Results

Positive Elements Supporting Returns

Treasury bill supply followed a typical seasonal trajectory marked by net reductions in issuance coinciding with tax collection periods in April and this pattern of restrained supply persisted across much of the quarter. Repurchase agreement rates experienced downward pressure stemming from diminished treasury bill settlement activity combined with heightened demand fueled by expansion in overall industry assets under management. These softer repurchase agreement rates in turn contributed to reduced daily secured overnight financing rate resets. For additional context the secured overnight financing rate averaged 3.62 percent over the quarter while the 90 day treasury bill rate averaged close to 3.67 percent and the effective Federal Funds rate averaged 3.63 percent. An allocation below benchmark levels in overnight repurchase agreements proved beneficial since those softer rates underperformed amid the bill supply dynamics previously described. Substituting maturing secured overnight financing rate indexed floating instruments with brief agency discount notes delivered incremental yield advantages when compared against repurchase agreement alternatives.

Detrimental Factors Affecting Results

At the outset of the quarter the fund held 45 percent of its assets under management in floating rate instruments the majority of which were indexed to the secured overnight financing rate. The decline in secured overnight financing rate resets exerted downward pressure on performance owing to the elevated exposure to such floating instruments. Initially spreads associated with secured overnight financing rate floating securities resided at the compressed end of historical ranges as efforts proceeded to trim this exposure. By the close of the quarter the allocation to floating rate securities had been adjusted downward to 35 percent.

Adjustments Made to the Portfolio

Market expectations regarding Federal Funds Rate movements underwent substantial revision during the quarter shifting from assumptions of an extended pause by the Federal Reserve to projections of potentially two rate increases over the ensuing 12 month horizon. Early in the period the strategy centered on decreasing floating rate exposure while progressing toward a neutral weighted average maturity position. Tangible advancements occurred on both objectives particularly through the reduction of floating rate securities from an initial 45 percent level down to 35 percent by quarter end. Permitting secured overnight financing rate floating bonds to mature early in the quarter represented a constructive action given the subdued nature of the secured overnight financing rate and the persistently tight pricing observed on newly issued floating instruments. Certain maturing floating positions were supplanted with extended duration floating instruments acquired at considerably more attractive valuations toward the conclusion of the quarter.

Forward Looking Portfolio Perspective

The outlook remains positive regarding the portfolio configuration which features a weighted average maturity of 38 days alongside a weighted average life of 99 days thereby allowing latitude for directional shifts as circumstances evolve. Spread levels on agency secured overnight financing rate floating instruments had appeared unappealing over multiple preceding months especially within the 18 to 24 month maturity segment. Heightened demand from Federal Home Loan Banks together with elevated secondary market inventory levels on dealer balance sheets have rendered spreads notably more attractive at present. Maintaining a meaningful allocation to floating rate securities continues to appear prudent within an environment where the Federal Reserve might initiate a series of rate hikes. Moreover treasury bill issuance is anticipated to remain substantial throughout the second half of 2026 which should sustain secured overnight financing rate settings within a constructive range. Close monitoring of the Federal Reserve under its new leadership continues in order to better comprehend their policy response patterns and communication approaches with market participants. Attention remains directed toward inflation developments as the Middle East conflict appears to wind down while labor market conditions receive scrutiny for any emerging wage pressures.

Performance Summary Details

For the period concluding on June 30 2026 with periods shorter than one year presented without annualization the average annualized returns showed the Thrivent Money Market Fund S share class delivering 0.84 percent over three months 1.69 percent year to date 3.70 percent over one year 4.45 percent over three years 3.35 percent over five years 2.08 percent over ten years and 2.10 percent since inception which began December 29 1997. The expense ratio stood at a net 0.32 percent matching the gross figure. All historical performance figures reflect past results which do not ensure future outcomes and investment values can fluctuate leading to redemption amounts that may exceed or fall short of initial costs. Current performance levels could differ from quoted data. Returns incorporate values extended to additional decimal precision which may cause excess return calculations to diverge slightly from differences between displayed rounded figures. The seven day current yield reached 3.41 percent while the seven day effective yield stood at 3.47 percent. The top ten holdings excluding derivatives and cash represented 22.86 percent of the fund as of May 29 2026 consisting of various U.S. Treasury Bills and Notes along with FHLB Discount Notes and FHL Bank positions with individual allocations ranging from 3.71 percent down to 1.46 percent.