Fixed Income

CoreBuilder® Core Plus SMA

Bloomberg U.S. Aggregate Bond Index
Benchmark name
2/1/2016
Inception date
Plus Fixed Income Team
Team
$220.5M
Strategy assets
Data as of 9/30/2024
SMA overview
Foundational fixed income portfolio focusing on our best global ideas
The CoreBuilder® Core Plus SMA aims to deliver total return in excess of the benchmark by using a risk-conscious, relative value approach to pursue upside potential, produce income for shareholders, and manage downside risk.

Increasingly integrated fixed income markets coupled with segmented investor bases can create substantial opportunities to generate attractive returns by allocating across global sectors. 
 
Key differentiators

  • Uses a six-month investment horizon to anticipate market inflection points
  • Allocates up to 35% in Plus sectors and a minimum of 65% to Aggregate sectors
  • Seeks diversified and unbiased sources of alpha to generate compelling returns over market cycle
  • Innovative portfolio structure of the CoreBuilder, captures the benefits of both mutual fund and SMA investing into one hybrid vehicle 

General facts

Current yield

4.74%

(as of 9/30/2024)

Average maturity

9.31 Years

(as of 9/30/2024)

Effective duration

6.20

(as of 9/30/2024)

Yield to worst

4.77

(as of 9/30/2024)

Average credit quality

A+

Quick resources

Q3 review and outlook

Janet Rilling, Senior Portfolio Manager and Head of the Plus Fixed Income team, discusses key markets events, drivers of fixed income performance in Q3 and changes to the team’s outlook and positioning.

Transcript

Janet Rilling: Welcome to the third quarter fixed income recap. During the quarter, bond markets delivered strongly positive total returns as a sizable rally in rates and the steepening of the yield curve led to bond prices that went higher. Investors saw a range of results depending on their allocation across the yield curve and the quality makeup of their portfolio. Broadly, bonds with more duration or, in other words, those that are more sensitive to changes in interest rates, and those with lower quality ratings outperformed bonds of higher quality or those with shorter duration. Yields fell and spreads, which is the additional compensation investors earn for bearing credit risk, mostly narrowed. A leading driver of the move in rates was the U.S. Federal Reserve, also known as the Fed, which began its rate cutting cycle and ended the higher for longer era in which bond markets have been trading for several quarters. U.S. economic data remained resilient and inflation continued to ease, giving the Fed confidence to implement a more aggressive 50 basis point (100 basis points equal 1%) cut to the Fed funds rate to start the easing cycle. There was a brief risk-off episode in early August, which was short-lived, but demonstrated that investors are still a bit on edge about the path of the economic cycle. The Fed joined other developed market central banks, such as the Bank of England, the European Central Bank, and the Bank of Canada, who had all lowered their main monetary policy rate in the second quarter. While there are outliers, such as Japan and Brazil who recently raised rates, this puts the United States in better sync with many central banks, who are moving to lower the restrictiveness of their policy rates. We believe this more synchronized global rate easing should offer some support to much of the global economy and allow recessionary risks to ease. That bodes well for the fundamental outlook. Demand for income continues to be very strong. Issuance in the investment grade and high yield corporate bond markets are at record levels in 2024, offering a strong technical support for investors. That leaves bond investors with supportive fundamentals and technicals, but valuations are stretched. Bond yields are lower than where they were a year ago, but relative to most of the last 15 years, they remain elevated. The income potential afforded through the public global fixed income markets is extremely high. Credit spreads, however, are very tight or low. Investors are getting paid less today to take credit risk in U.S. investment grade or high yield corporate credit than they have for nearly all of the last 15 years. Our outlook expects that the Fed will continue to ease policy, but we expect a more gradual rate cutting path, which implies that yields will remain somewhat elevated. We continue to see this as a good environment to source high-quality, broadly diversified income. That has led us to position portfolios with a neutral duration posture and to find opportunities to earn carry while moving up in quality and reducing our exposure to lower-rated sectors where valuations have gotten extreme. We have positioned our U.S investment grade credit allocation towards the low end of our neutral range and we remain underweight U.S. high yield exposures relative to past positioning. We modestly shifted plus sector exposures in the third quarter by taking advantage of the volatility in early August through a small increase in U.S. high yield bonds and European high yield corporates. And we added to our high-quality liquid exposures in global government bonds as U.S. yields fell. We believe rate and spread volatility will persist. We have built optionality into portfolios and have moved modestly up in quality. We'll look to tactically exploit opportunities through timely adjustments to positioning, using our multiple levers based on our six-month outlook and an unbiased approach. Thank you for your time and please reach out to your Allspring Global Investments contact if you have any questions about anything we discussed or would like some additional information.

Performance

Average annual returns

Average annual returns

(as of 9/30/2024)
2/1/2016
1M
3M
YTD
1Y
3Y
5Y
10Y
Inception
Composite (Pure Gross)
1.44
5.68
5.31
13.24
-0.68
2.08
-
3.63
Composite (Net)
1.31
5.28
4.13
11.54
-2.17
0.56
-
2.09
Bloomberg U.S. Aggregate Bond Index
1.34
5.20
4.45
11.57
-1.39
0.33
-
1.72

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

Performance is historical and does not guarantee future results. For more information, please refer to the GIPS composite report found in the documents section.

Calendar year

Calendar year

(as of 12/31/2023)
2023
Fund
7.13
Benchmark
5.53

Performance is historical and does not guarantee future results. For more information, please refer to the GIPS composite report found in the documents section.


Performance and volatility metrics

Performance and volatility metrics

Data is unavailable at this time, please check back later.

Composition

Portfolio statistics

Portfolio statistics

(as of 9/30/2024)
SMA Benchmark
Number of Holdings 464 13702
AMT 0.00 0.00
Effective Duration 6.20 6.12
Weighted Average Effective Maturity 9.31 Years 8.69 Years

Portfolio holdings, credit quality, and characteristics are based on a representative account. CoreBuilder Shares are a series of investment options within the separately managed accounts advised or subadvised by Allspring Funds Management, LLC. The shares are fee-waived mutual funds that enable certain separately managed account investors to achieve greater diversification than smaller managed accounts might otherwise achieve. Allspring Global Investments, LLC, provides the sub advisory services for the Allspring Funds Management retail managed account product.

Credit quality

Credit quality

(as of 9/30/2024)
Type
SMA
Benchmark
AAA/Aaa
6.26% 3.84%
AA/Aa
50.33% 72.20%
A/A
15.95% 11.46%
BBB/Baa
18.29% 12.49%
BB/Ba
6.06% -
B/B
1.94% -
CCC/Caa and below
0.19% -
Not rated
4.54% -
Cash & equivalents
-3.56% -

The ratings indicated are from Standard & Poor's, Fitch Ratings Ltd., and/or Moody's Investors Service. The percentages of the fund's portfolio with the ratings depicted in the chart are calculated based on total investments of the fund. If a security was rated by all three rating agencies, the middle rating was used. If rated by two of three rating agencies, the lower rating was used, and if rated by one of the agencies, that rating was used. Credit quality is subject to change and may have changed since the date specified. Percent total may not add to 100% due to rounding.

Maturity

Maturity

(as of 9/30/2024)
Maturity Range
SMA
0 - 1 year
1.27%
1 - 3 years
13.23%
3 - 5 years
24.38%
5 - 10 years
45.57%
10 - 20 years
4.14%
20+ years
11.41%

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

Top 10 holdings

Top 10 holdings

(as of 9/30/2024)
Security
SMA
GNMA
7.50%
GNMA
7.17%
FNMA POOL CA6738 FN 08/50 FIXED 3
4.51%
U.S. Treasuries
4.24%
U.S. Treasuries
2.77%
GNMA
2.33%
JPMorgan Chase & Co.
1.65%
ConocoPhillips Company
1.63%
Oracle Corporation
1.58%
Comcast Corporation
1.53%
Top 10 represents 34.91% of total net assets

Largest company weights are based on market value of the representative account and not necessarily held in all client portfolios. The information shown is not intended to be, nor should it be construed to be, a recommendation to buy or sell an individual security. A list of all holdings from the prior one-year period is available upon request.

Portfolio composition

Portfolio composition

(as of 9/30/2024)
Credit Assets
Allocation
Benchmark
U.S. treasuries
15.27% 43.63%
ABS
9.74% 0.45%
Agencies
0.18% 1.24%
CLO
0.76% -
CMBS
2.16% 1.51%
CMO
2.66% -
Corporate bonds
35.52% 25.25%
Foreign government bonds
3.38% -
MBS
28.88% 25.38%
Municipals
0.04% 0.24%
Sovereign
1.40% 1.01%

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

Documents

Literature Date
Fact Sheet 9/30/2024 Download
GIPS Report 9/30/2024 Download
Our team
Meet the investment team

The team employs a sector specialist model whereby tenured investment professionals are supported by rigorous credit research to source opportunities across global fixed income markets.

Contact Us

We look forward to helping you with your investment needs

 

Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. Changes in market conditions and government policies may lead to periods of heightened volatility in the bond market and reduced liquidity for certain bonds held by the fund. In general, when interest rates rise, bond values fall and investors may lose principal value. Interest-rate changes and their impact on the fund and its share price can be sudden and unpredictable. Loans are subject to risks similar to those associated with other below-investment-grade bond investments, such as credit risk (for example, risk of issuer default), below-investment-grade bond risk (for example, risk of greater volatility in value), and risk that the loan may become illiquid or difficult to price. 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 foreign investment risk, high-yield securities risk, and mortgage- and asset-backed securities risk. Consult the fund's prospectus for additional information on these and other risks.

Allspring Managed Account Services (the firm) is a unit within Allspring Global Investments and is responsible for the management and administration of the Allspring Funds Management, LLC, retail separately managed account portfolios (wrap portfolios). Allspring Funds Management acts as a discretionary manager for separately managed accounts ("SMA") and as a non-discretionary model provider in a variety of managed account or wrap fee programs (“MA Programs”) sponsored by third party investment advisers, broker-dealers, or other financial services firms (a “Sponsor”). When acting as non-discretionary model provider, Allspring Funds Management responsibility is limited to providing non-discretionary investment recommendations (in the form of model portfolios) to the Sponsor. The Sponsor may use these recommendations in connection with its management of MA Program accounts. In these “model-based” programs, the Sponsor serves as the investment manager and maintains trade implementation responsibility.