EKGCX

Special Global Small Cap Fund

$22.21
NAV
+$0.23 / +1.05%
$142.8M
Fund assets
1.32%
Year-to-date return
3/16/1988
Fund inception date
Data as of 7/22/2024
Fund overview
Pursuing alpha with a CPA-minded approach
The Special Global Small Cap Fund seeks long-term capital appreciation by principally investing in equity securities of small global companies.

Accounting expertise and processes guide decision-making.  

  

Key differentiators

  • Leverages a unique security selection process in the pursuit of compelling returns and a low-risk profile  
  • Performs bottom-up research to find companies with durable competitive advantages, free cash flow generation, and balance sheet flexibility 
  • Uses a disciplined valuation approach to find companies with favorable reward/risk profiles  

General facts

Morningstar category

Global Small/Mid Stock

Lipper category

Global Small-/Mid-Cap Funds

Ticker

EKGCX

CUSIP

94985D830

Fund number

429

Benchmark name

MSCI World Small Cap Index (Net)

Gross expense ratio

2.36%

Net expense ratio

2.22%

Dividend frequency

Annually

Active share

97.13

Quick resources

Morningstar Rating™

Out of 133 funds, Global Small/Mid Stock As of 6/30/2024


An investment’s Overall Morningstar Rating™, based on its risk-adjusted return, is a weighted average of its applicable 3-, 5-, and 10-year Ratings.

Q2 market update

Bryant VanCronkhite, senior portfolio manager and co-head of the Special Global Equity team, discusses key factors driving fund performance and equity markets across market cap, style, and factors in Q2.

Transcript

Bryant VanCronkhite: The winds of change are upon us and investors need to take note. I am Bryant VanCronkhite, senior portfolio manager for the Special Global Equity team at Allspring Global Investments, and this is our Q2 2024 recap. Over the next several minutes, I will walk through the key macro events that impacted the quarter performance of equity markets across market caps, styles, and factors. I'll then dive deeper into sector specific drivers and, finally, what investors should be watching for and thinking about for the second half of the year. Now, the Federal Reserve (Fed) and the consumer have dominated the headlines for the last several quarters, but we are approaching key pivot points as we enter the second half of the year. The first quarter’s strong equity market returns were led by a free-spending consumer who drove a resilient economy. But during Q2 and early into Q3, we observed increasing signs that spending is slowing and the economy could begin to follow it lower. Retail companies highlighted that consumers are reducing overall spend, delaying large purchases, and shifting from branded products to generic products. Consumer fatigue appears to be setting in and could remove one more leg of our economic stool. Fortunately, capital spending from the lagged impact of past fiscal stimulus, such as the IIJA and IRA bills that were passed during COVID, are still working their way through the economy. Companies are reporting Q2 earnings over the next several weeks and along with it, they'll be updating expectations for the second half of the year. The market will move based on the reported results, but more importantly, we need to listen for clues on forward expectations related to the consumer and capital spending. Inflation, the Federal Reserve, and the path of interest rates have become household topics over the past few years and were once again front and center in the second quarter. Expectations for interest rate cuts are volatile and they ebb and flow with every inflation data point. Exiting Q1 and to start Q2, inflation surprised to the upside and reduced expectations for interest rate cuts. Now, as we exit Q2, inflation has returned to its moderating path but continues to be well above the Fed's 2% target. Now, however, the June CPI print released on July 11 is showing continued signs of slowing. Investors are currently pricing in a little over 75% chance for a cut in in September. That will be highly dependent on inflation continuing to slow and employment metrics showing a balance between supply and demand. Now, for me, I'm much more focused on employment than inflation because one of the keys to confidence in sustained lower inflation is the availability of qualified workers. However, one of the clearest signs of a slowing economy is whether companies have confidence to maintain their workforce. Or, conversely, are they laying off employees? If unemployment metrics rise before the Fed cuts rates, it is more likely that any Fed interest rate cut will be viewed negatively by equity markets as it will be deemed the Fed waited way too long for the cut. To put this into perspective, the S&P 500 has fallen following 7 of the last 8 times the Fed made their first interest rate cut of a cycle. The average job over the last eight Fed cuts was 23.3% and it took the market an average of 213 days from the time of the first Fed interest rate cut to find its bottom. Clearly, the Fed has had a tendency to act too late and this is the central macro debate for this cycle. Will inflation fall and employment balance out, giving the Fed the chance to act proactively before the economy slows? How did macro forces impact equity market performance during the second quarter of 2024? Well, generally speaking, growth beat value and large cap beat small cap. This is a very common performance pattern when investors are cautious on the broad economy. Again, a slowing consumer and sticky inflation is forcing the Fed to hesitate, making investors worried about economic growth going forward. So, investors are pushing capital to the largest companies with the most visible growth. Style factor performance during the quarter was consistent with this general theme of predictability. Momentum was the strongest performing factor, indicating investors have a preference for what has been outperforming recently. A heavy component of this is the mega-cap technology trend, fueled by the ongoing AI investment theme. In addition, the factor of profitability was another strong performing style factor during the quarter. Now, conversely, beta and value-based factors were amongst the worst performers. Investors tend to seek value factors when the economy is broadening and strengthening, two things that were clearly not happening in the second quarter. I should note that style factor performance has been volatile over the past 18 months with swings often hinging on sentiment around the timing of the Federal Reserve's next move. Let's dive next into sector performance. We're going to use the Russell 1000 Index when talking about large caps, the Russell Midcap Index for mid-cap stocks, and the Russell 2000 Index for small caps. When referring to value or growth in our discussion, our comments will be based on the value or growth index for the Russell 1000, the Russell Midcap, and the Russell 2000 Indices. Starting perhaps with the most talked about sector, information technology, those companies deemed the early winners of the artificial intelligence arms race performed very well, making the IT sector the best performing in the Russell 1000 Growth Index. However, as you move down in market cap, the technology sector’s relative performance dropped. Within the growth indices, the mid-cap tech marginally outperformed while small cap tech lagged behind the returns of the respective overall index. On the value side, technology outperformed across all market caps, but it wasn't the top performer at any market cap level. What that tells us about information technology is that stock leadership is very narrow and outperformance from stock selection required being in a small set of companies. If, or maybe when, the AI theme loses its luster, I would expect large cap tech to cede its strength to its smaller brethren or to other sectors. Now, a surprise winner in Q2 was utilities. Utilities outperformed across all the Russell Value and Growth indices and was the top performing sector across all three of the value indices. Typically, utilities are bought for their defensive characteristics, which might provided a modest tailwind in Q2. Utility stocks also tend to do well when the 10-year Treasury yield is dropping, but we ended the quarter just about where we began the quarter in terms of the risk-free interest rate. The surprising driver of utility stock strength this quarter was none other than the AI trade. It seems we just can't escape that theme. Investors became excited about how power-hungry those AI chips are that are being placed into action and, eventually, the amount of power required as we run AI-optimized search and other new functionalities. The demand for power to run these chips is sparking expectations for accelerated growth in utility company revenues, specifically for independent power producers who sell power directly to the grid or to individual large consumers. The combination of growing demand and defensive cash flow characteristics might put this otherwise very sleepy category of utility stocks into the spotlight for the time being. Returning to the soft trends of consumer spending seen during the quarter, it's worth calling out the underperformance of the consumer discretionary sector, which underperformed the broad indices across both value and growth styles and across all market cap sizes. The pain was widespread and included underperformance amongst select distributors, restaurants, household durables, and auto components. The pain was initially most prevalent in businesses exposed to the lowest income consumer, but as the quarter progressed, evidence was presented to us that the challenges are moving up the income cohort group. This is definitely worth keeping an eye on since the consumer drives a large portion of the U.S. economy and, thus, overall economic strength. So, what should investors be watching for as we embark on the third quarter of 2024? Certainly, many eyes remain on labor and inflation. I continue to worry that the window for the Fed to proactively cut rates is closing, but their hands remain tied. Inflation is sticking above their 2% target and the fear of igniting another bout of rising inflation is far greater than the concern of pushing the U.S. economy into a modest slowdown. Equity market returns are typically not positive following the Fed's first interest rate cut, but this Fed does seem determined to create that soft landing investors have been hoping for. Time will tell if they can slip through the window before the economic clock winds down. I also continue to keep an eye on the very high concentration levels within the most commonly used index, which is the S&P 500. The top ten stocks make up over 30% of the index. These are world-renowned businesses that have proven themselves to be good growers and highly profitable. But if there were a flow of money out of equities for any reason, it is seemingly safe to assume that those largest positions will feel the weight of that exodus. What that means for the small and mid-cap stocks is not entirely certain to me, but at a minimum, investors should be thinking about their allocation to specific indices and making sure they are comfortable with the concentration of risk and deciding if now is the time to resize their allocations. Finally, I continue to focus on a large amount of debt that is coming due over the next 24 months. The majority of that debt was priced at much lower interest rates than are currently available, meaning companies will either need to consume cash to pay that debt down or resign to the fact they'll be paying higher interest expense on the debt as they refinance it. Neither option is ideal when it comes to companies having available funds to grow through M&A, invest back into the business, or pay dividends. Over the last decade, balance sheet strength might have been an underappreciated asset—pun intended—as interest rates plummeted and low cost debt was available to every company. But now, as rates remain higher for longer, the power of financial freedom, as measured by a well-built balance sheet, could be the key to stock selection success. Let's not forget a tremendous amount of debt is in private credit and private equity where visibility is limited. Could this be the contagion that creates the next crisis or will we skate by with only a few blips on the radar? Indeed, the economic and market winds are beginning to shift. Investors have plenty of reasons to think long and hard about how they are currently allocated amongst the various equity categories. And importantly, how do you want to use the unique investment process of your active managers to mitigate risk and drive future returns? Thank you for listening to our second quarter 2024 recap video. Please reach out to your Allspring Global Investments contact person if you'd like to have additional conversations.

Performance

Average annual returns

Average annual returns

(as of 6/30/2024)
3/16/1988
1M
3M
YTD
1Y
3Y
5Y
10Y
Inception
Fund
NAV POP
-2.97
-4.19
-3.06
1.34
-5.83
3.08
4.84
8.65
-3.97
-5.19
-4.06
0.34
-5.83
3.08
4.84
8.65
MSCI World Small Cap Index (Net)
-1.94
-2.78
1.49
9.14
-1.29
6.87
6.29
-
S&P Developed SmallCap Index
-1.91
-3.09
2.04
9.62
-1.03
6.93
6.45
-
Lipper Global Small-/Mid-Cap Funds
-0.92
-1.82
2.35
9.45
-3.68
7.12
6.61
-
Expenses (as of 3/1/2024)
Gross Expense Ratio
2.36 %
Net Expense Ratio
2.22 %

One-month, three-month and year-to-date returns are not annualized.

Figures quoted represent past performance, which is no guarantee of future results, and do not reflect taxes that a shareholder may pay on an investment in a fund. Investment return, principal value, and yields of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance shown without sales charges would be lower if sales charges were reflected. Current performance may be lower or higher than the performance data quoted and assumes the reinvestment of dividends and capital gains. 

Public offering price (POP) is the price of one share of a fund including any sales charges. Net asset value (NAV) is the value of one share of the fund excluding any sales charges. Had sales charges been included, performance would be lower.

For Class C, the maximum front-end sales charge is 1.00%. Performance including sales charge assumes the sales charge for the corresponding time period. 

The manager has contractually committed, through 2/28/2025, to waive fees and/or reimburse expenses to the extent necessary to cap the fund's total annual fund operating expenses after fee waivers at 2.22%. Brokerage commissions, stamp duty fees, interest, taxes, acquired fund fees and expenses (if any), and extraordinary expenses are excluded from the expense cap. Prior to or after the commitment expiration date, the cap may be increased or the commitment to maintain the cap may be terminated only with the approval of the Board of Trustees. Without this cap, the fund's returns would have been lower. The expense ratio paid by an investor is the net expense ratio (the total annual fund operating expenses after fee waivers) as stated in the prospectus.

Calendar year

Calendar year

(as of 12/31/2023)
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Fund
13.34
-25.33
20.53
9.23
23.51
-12.05
23.11
17.71
-1.88
-0.65
Benchmark
15.76
-18.75
15.75
15.96
26.19
-13.86
22.66
12.71
-0.31
1.90
Morningstar
-
-
-
-
-
-
-
5.54
-1.69
2.79
Growth of $10,000

Growth of a $10,000 investment

(as of 6/30/2024)

This chart shows the value of a hypothetical $10,000 investment in the fund over the specified time period up to 10 years or since its inception (for funds lacking 10-year records). The result is compared with benchmarks, which may include a broad-based market index and a peer group average or index. Market indexes do not include expenses, which are deducted from fund returns as well as mutual fund averages and indexes.

Does not include sales charges and assumes reinvestment of dividends and capital gains. If sales charges were included, returns would be lower.

Performance and volatility metrics

Performance and volatility metrics

(as of 6/30/2024)
3 Year 5 Year 10 Year
Alpha -4.66 -2.95 -8.95
Beta 0.97 0.88 0.88
Excess Return -4.55 -3.79 -1.61
Information Ratio -0.86 -0.65 -0.34
Sharpe Ratio -0.47 0.04 0.19
R2 0.93 0.93 0.93
Tracking Error 5.28 5.86 4.80
Standard Deviation 19.33 19.49 16.22
Upside Market Capture Ratio 79.40 75.05 74.94
Downside Market Capture Ratio 101.32 98.34 98.17
Morningstar ratings and rankings

Morningstar ratings and rankings

(as of 6/30/2024)
Overall
Global Small/Mid Stock (Out of 133 funds)
Three Year
58th percentile (84 out of 133)
Five Year
92nd percentile (107 out of 117)
Ten Year
69th percentile (57 out of 74)

The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) ratings.

Morningstar rankings represent a fund's total return rank relative to all funds that have the same category. The percentile ranking is based on the fund's total return percentile rank relative to all funds that have the same category for the same time period. The highest (most favorable) percentile rank is 1% and the lowest (least favorable) percentile rank is 100%. Morningstar rankings do not include the effect of sales charges. The absolute ranking is based on the fund’s total return rank relative to all funds that have the same category for the same time period. Past performance is no guarantee of future results.

Prices and distributions

Historical prices

YTD high $22.43 7/16/2024
YTD low $20.82 4/17/2024
52-week high $22.43 7/16/2024
52-week low $18.27 10/29/2023
2023 high $22.12 12/27/2023
2023 low $18.27 10/29/2023
Best quarterly return 19.94% 12/31/2020
Worst quarterly return -25.07% 3/31/2020
Best annual return 26.14% 12/31/2013
Worst annual return -25.33% 12/31/2022

Distribution summary

Dividends Annually
Capital gains Annually

Distribution history

Distribution history Type Per share amount Re investment price
2022-12-09 Long-term capital gain $1.44828 $19.55
2021-12-09 Long-term capital gain $2.87793 $27.04
2021-12-09 Short-term capital gain $4.88779 $27.04
2019-12-10 Long-term capital gain $0.94004 $26.43
2019-12-10 Short-term capital gain $0.23276 $26.43
2018-12-10 Long-term capital gain $2.8698 $23.71
2018-12-10 Short-term capital gain $0.53787 $23.71
2017-12-13 Long-term capital gain $3.84356 $29.35
2017-12-13 Short-term capital gain $1.1523 $29.35
2016-12-29 Dividend $0.07062 $28.47
2016-12-09 Long-term capital gain $1.89348 $28.77
2016-12-09 Short-term capital gain $0.45599 $28.77
2015-12-11 Long-term capital gain $1.5918 $25.93
2014-12-11 Long-term capital gain $5.26702 $27.82
2014-12-11 Short-term capital gain $1.47026 $27.82
2013-12-30 Dividend $0.01318 $35.41
2007-12-04 Long-term capital gain $1.5328 $28.91
2007-12-04 Short-term capital gain $0.23446 $28.91
2006-12-05 Long-term capital gain $2.1782 $26.61
2006-12-05 Short-term capital gain $0.05798 $26.61
2005-11-22 Long-term capital gain $2.2464 $23.25
Download CSV

Composition

Portfolio statistics

Portfolio statistics

(as of 6/30/2024)
Fund Benchmark
Number of Holdings 91 4056
Median Market Cap 2.80 1.55
Dividend Yield 1.63 2.04
PE Ratio 22.03 21.53
PB Ratio 2.18 1.83
EPS Growth 11.34 12.75
Return on Equity 12.59 10.00
Portfolio Turnover 23.74 -

Equity Style Box

(as of 6/30/2024) Overview chart

Placement within the Morningstar Equity Style Box is based on two variables: relative median market capitalization and relative price valuations (price/book and price/earnings) of the fund’s portfolio holdings. These numbers are drawn from the fund’s portfolio holdings figures most recently entered into Morningstar’s database and the corresponding market conditions. The Ownership Zone is represented by a shaded area surrounding the centroid. This zone encompasses 75% of a portfolio’s holdings on an asset-weighted basis and is designed to be a visual measure of how wide-ranging the portfolio is.

Holdings

Top 10 holdings

(as of 6/30/2024)
Security
Fund
Innospec Inc.
4.13%
Novanta Inc
3.33%
Gibraltar Industries, Inc.
3.19%
J & J Snack Foods Corp.
2.84%
Ansell Limited
2.59%
Spectris plc
2.57%
Alten SA
2.31%
CSW Industrials, Inc.
2.10%
Progress Software Corporation
2.06%
Hanover Insurance Group, Inc.
2.05%
Top 10 represents 27.16% of total net assets
Sector allocation

Sector Allocation

(as of 6/30/2024)
Type
Fund
Benchmark
Industrials
29.80% 19.94%
Information technology
18.53% 11.30%
Materials
11.28% 7.48%
Consumer staples
10.64% 4.81%
Health care
10.37% 9.64%
Consumer discretionary
7.01% 13.34%
Financials
5.82% 15.07%
Energy
2.60% 5.05%
Real estate
2.59% 7.91%
Communication services
1.34% 2.96%
Utilities
0.00% 2.50%

Sector diversification is a breakdown of the fund's investments based on the S&P Global Industry Classification Standard (GICS), a breakdown of market sectors used by Standard & Poor's. Sector weights are subject to change and may have changed since the date specified. Percent total may not add to 100% due to rounding.

Geographic allocation

Geographic allocation

(as of 6/30/2024)
Type
Fund
Benchmark
United States
59.63% 60.82%
Japan
9.51% 12.20%
United Kingdom
8.18% 5.36%
Germany
4.33% 1.42%
Australia
3.64% 3.33%
Italy
2.88% 1.19%
France
2.65% 1.25%
Canada
2.06% 3.81%
Spain
1.94% 0.63%
Sweden
1.83% 2.05%

Geographic allocation is subject to change and may have changed since the date specified. Percent total may not add to 100% due to rounding.

Documents

Literature Details Frequency
Fact Sheet A, C, Administrator, Institutional Quarterly Download
Regulatory Document Details Date
Annual Report A, C, Administrator, Institutional 10/31/2023 Download
Full Prospectus A, C 3/1/2024 Download
Quarterly Holdings A, C, Administrator, Institutional 1/31/2024 Download
Quarterly Holdings A, C, Administrator, Institutional 7/31/2023 Download
Semi-annual Report A, C, Administrator, Institutional 4/30/2024 Download
Statement of Additional Information A, C, Administrator, Institutional 3/1/2024 Download
Summary Prospectus A, C 3/1/2024 Download
Our team
Meet the investment team

The team follows a fundamental approach of identifying companies with competitive advantages, sustainable free cash flow, and flexible balance sheets, helping deliver long-term capital appreciation.

Contact Us

We look forward to helping you with your investment needs

 

Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Foreign investments are especially volatile and can rise or fall dramatically due to differences in the political and economic conditions of the host country. These risks are generally intensified in emerging markets. The use of derivatives may reduce returns and/or increase volatility. Certain investment strategies tend to increase the total risk of an investment (relative to the broader market). This fund is exposed to geographic risk and smaller-company securities risk. Consult the fund's prospectus for additional information on these and other risks.

  
The Morningstar Rating™ for funds, or star rating, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar risk-adjusted return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% 3-year rating for 36–59 months of total returns, 60% 5-year rating/40% 3-year rating for 60–119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all three rating periods. Past performance is no guarantee of future results.

Some of Morningstar’s proprietary calculations, including the Morningstar Rating™, are not customarily calculated based on adjusted historical returns. However, for new share classes/channels, Morningstar may calculate an extended-performance Morningstar Rating. The extended performance is calculated by adjusting the historical total returns of the oldest share class of a fund to reflect the fee structure of the younger share class/channel, attaching this data to the younger share class’s performance record, and then compounding the adjusted plus actual monthly returns into the extended-performance Morningstar risk-adjusted return for the 3-, 5-, and 10-year time periods. The Morningstar risk-adjusted returns are used to determine the extended-performance Morningstar Rating. The extended-performance Morningstar Rating for this fund does not affect the retail fund data published by Morningstar, as the bell curve distribution on which the ratings are based includes only funds with actual returns. The Overall Morningstar Rating for multi-share funds is based on actual performance only or extended performance only. Once the share class turns three years old, the Overall Morningstar Rating will be based on actual ratings only. The Overall Morningstar Rating for multi-share variable annuities is based on a weighted average of any ratings that are available.

While the inclusion of pre-inception data in the form of extended performance can provide valuable insight into the probable long-term behavior of newer share classes of a fund, investors should be aware that an adjusted historical return can provide only an approximation of that behavior. For example, the fee structures of a retail share class will vary from that of an institutional share class, as retail shares tend to have higher operating expenses and sales charges. These adjusted historical returns are not actual returns. The underlying investments in the share classes used to calculate the pre-performance string likely will vary from the underlying investments held in the fund after inception. Calculation methodologies used by Morningstar may differ from those applied by other entities, including the fund itself.

The manager has contractually committed to certain fee waivers and/or expense reimbursements. Without these reductions, the fund’s returns would have been lower and rankings may have been lower. These reductions may be discontinued.

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Performance for the fund or the class shown may reflect a predecessor fund's or class' performance and may be adjusted to reflect the fund's or class' expenses as applicable.