Fund overview
Transition opportunities in global high yield
The Climate Transition Global High Yield Fund seeks to deliver total returns, consisting of a high level of current income and capital appreciation, whilst investing in a broad range of best-in-class companies transitioning to a lower-carbon world, with a portfolio target of net zero by 2050.

The fund is a globally diversified portfolio of predominantly high yield credits designed to balance financial and climate objectives.

Key differentiators

  • Accesses the full range of credit opportunities represented by rapid, large-scale decarbonisation and a global, sector-wide transition
  • Takes advantage of fully integrated worldwide fixed income offerings, balancing global portfolio construction and local coverage
  • Focuses on companies’ forward transition performance rather than excluding today’s carbon emitters
  • Uses Allspring’s Climate Transition Framework to optimise security selection by holistically evaluating the implications of climate change on sector and company fundamentals

Uses a proprietary ESGiQ (ESG Information Quotient) rating system to capture key issues that may be mispriced

PM perspective

PM Perspective: Global High Yield

Watch Sarah Harrison, senior portfolio manager for the Plus Fixed Income team, review how our 2024 global high yield themes played out and discuss the key opportunities for 2025

Transcript

Sarah Harrison: In January of this year, we presented four global high yield themes for 2024 with a view on how each of these would play out. Let's see how we did. Firstly, we proposed that concerns about the sizable maturity wall on high yield were exaggerated. Over the course of 2024, short-dated maturities have so far been dealt with in an orderly fashion and not just 2024 maturities, but prefunding of 2025 and 2026 maturities has occurred, as well. The primary market has remained wide open and default rates have remained relatively contained. Secondly, we proposed that concerns around a zombie apocalypse in the high yield space were overdone. While higher rates have eaten into levered free cash flow generation, EBITDA has remained more resilient than anticipated and as a result, distress ratios have materially improved over the course of the year. Thirdly, we proposed that transaction activity, which would bring about very welcome net new issuance and idiosyncratic opportunities, would increase. This has happened but not yet to the extent that we had hoped. We have seen investment banking revenues come off the troughs and a selection of new issuers as a result of LBO activity picking up, but we can't earnestly say this is significant yet. As well, IPOs, particularly in Europe, still seem to be on the back burner. Finally, we proposed that central bank activity would be a key driver in selecting a geographic overweight. We positioned as overweight Europe versus the U.S. in the belief that Europe would have a steeper cutting trajectory than the U.S. As of mid-November, European high yield is set to outperform U.S. high yield this year on a hedged basis. So, what are we paying attention to and how are we positioning for 2025? The key view that underpins our 2025 outlook is that we will see central bank policy divergence around the world with higher for longer in the U.S., high-ish for longer in the UK, and a continuation of the cutting cycle in Europe, though possibly less steep of a trajectory than expected. Firstly, we are looking for the potential for a correlation breakdown between high yield and equities. High yields has historically been very correlated with equities, but if you look at the driver of the small cohort of companies in distress today, this distress has been driven by high interest burdens eating into cash flow rather than significant top-line declines. We believe that rate hikes will be more helpful to high yield companies than strong growth. So, we will continue to run with an overweight to Europe where we expect more rate cuts in the U.S. and have added to this position in recent weeks. Secondly, we anticipate default rates will continue to rise from here as a result of a higher for longer environment but remain contained. We still believe this will be mostly orderly where shareholders and bondholders are aligned and expect to see more distressed exchanges. That being said, we do recognize the increase in drop down transactions and uptiering and will continue to stay vigilant. We do not expect “muddle through refis” to get done anymore. As a result, we are highly selective when moving down the credit spectrum, underweight CCCs, and demonstrating discipline in a period of exuberance. Thirdly, we are doubling down on the view that transaction activity will continue to pick up, but new issuance to fund this will be easily absorbed by an uptick in fund flows, among other sources of capital. They should continue to be supportive of the technical and keep credit spreads rangebound with global high yield remaining attractive on an all-in yield basis.

Performance

Past performance is not indicative of future results.

Calendar year

Calendar year

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

Average annual returns

(as of 10/31/2024)
6/6/2023
1M
3M
YTD
1Y
3Y
5Y
10Y
Inception
Fund
-0.28
2.30
7.01
15.10
-
-
-
10.82
ICE BofA Developed Markets High Yield Constrained Index Hedged
-0.24
2.81
7.74
16.18
-
-
-
11.75
Expenses (as of 8/31/2023)
Annual management fee
0.50 %
Total expense ratio (TER)
0.65 %

The ongoing charges/total expense ratio (TER) reflects annual total operating expenses for the class, excludes transaction costs and is expressed as a percentage of net asset value. The figure shown is from current KID. The investment manager has committed to reimburse the Sub-Fund when the ongoing charges exceed the agreed upon TER. Ongoing charges may vary over time.

Past performance is not indicative of future results. Performance calculations are net of all applicable fees and are calculated on a NAV-to-NAV basis (with income re-invested). Performance shown is for class and currency indicated and returns may increase/decrease as a result of currency fluctuations. 

Cumulative

Cumulative

(as of 10/31/2024)

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

Products must have at least a 36 month performance record before we show these metrics.
Morningstar ratings and rankings

Morningstar ratings and rankings

Investments must have at least 36 continuous months of total returns in order to receive a rating from Morningstar.

Prices, yields and distributions

Historical prices

YTD high $106.01 9/29/2024
YTD low $101.98 4/16/2024
52-week high $106.01 9/29/2024
52-week low $101.56 12/11/2023
2023 high $104.23 12/31/2023
2023 low $97.28 10/22/2023
Best quarterly return 6.74% 12/31/2023
Worst quarterly return 1.00% 9/30/2023
Best annual return -
Worst annual return -

Distribution summary

Dividends Monthly
Capital gains Annually

Yields

Yield Statistic Date
Distribution yield 6.56% 12/10/2024
Yield to maturity 6.97% 10/31/2024
Yield to worst 6.64% 10/31/2024

Distribution history

Distribution history Type Per share amount Reinvestment price
2024-12-02 Dividend $0.58663624 $104.89
2024-12-01 Dividend $0.58663624 $104.89
2024-11-30 Dividend $0.58663624 $104.89
2024-09-03 Dividend $0.67578336 $104.73
2024-08-01 Dividend $0.6399276 $103.94
2024-07-01 Dividend $0.58374833 $102.91
2024-06-03 Dividend $0.66441868 $102.93
2024-05-02 Dividend $0.64983968 $102.46
2024-04-02 Dividend $0.59175972 $103.22
2024-03-01 Dividend $0.60406793 $103.23
2024-02-01 Dividend $0.5744171 $103.62
2024-01-02 Dividend $0.61778926 $103.25
2023-12-01 Dividend $0.58665562 $101.13
2023-11-02 Dividend $0.6107526 $98.61
2023-10-02 Dividend $0.61247428 $98.49
2023-09-01 Dividend $0.60646691 $100.31
2023-08-01 Dividend $0.57373383 $100.48
2023-07-03 Dividend $0.49693268 $99.79
Download CSV

The distribution yield is based on the actual distributions paid by the fund. The distribution yield is calculated by summing the fund’s distributions over the preceding 12 months and dividing that figure by the applicable share price at the end of the period.

Composition

Portfolio statistics

Portfolio statistics

(as of 10/31/2024)
Fund Benchmark
Number of Holdings 275 2683
Number of Issuers 224.00 1,223.00
Effective Duration 3.02 3.09
Weighted Average Effective Maturity 4.26 Years 4.30 Years
Average Credit Rating BB- B+
Average Maturity 9.66 Years 8.65 Years
Credit Spread Duration 3.29 3.24

Placement within the Morningstar Fixed-Income Style Box™ is based on two variables: the vertical axis shows the credit quality of the long bonds owned and the horizontal axis shows interest rate sensitivity as measured by a bond's effective duration. For credit quality, Morningstar combines the credit rating information provided by the fund companies with an average default rate calculation to come up with a weighted average credit quality. The weighted average credit quality is currently a letter that roughly corresponds to the scale used by a leading NRSRO. Bond funds are assigned a style box placement of low, medium, or high based on their average credit quality. Funds with a low credit quality are those whose weighted average credit quality is determined to be less than BBB-, medium are those less than AA- but greater or equal to BBB-, and high are those with a weighted average credit quality of AA- or higher. When classifying a bond portfolio, Morningstar first maps the NRSRO credit ratings of the underlying holdings to their respective default rates (as determined by Morningstar’s analysis of actual historical default rates). Morningstar then averages these default rates to determine the average default rate for the entire bond fund. Finally, Morningstar maps this average default rate to its corresponding credit rating along a convex curve. For municipal bond funds, Morningstar also obtains from fund companies the average effective duration. In these cases static breakpoints are used. These breakpoints are as follows: (i) Limited: 4.5 years or less; (ii) Moderate: more than 4.5 years but less than 7 years; and (iii) Extensive: more than 7 years. In addition, for non-U.S. taxable and non-U.S. domiciled fixed-income funds, static duration breakpoints are used: (i) Limited: less than or equal to 3.5 years; (ii) Moderate: greater than 3.5 years and less than or equal to 6 years; and (iii) Extensive: greater than 6 years.

Credit quality

Credit quality

(as of 10/31/2024)
Type
Fund
Benchmark
BBB/Baa
5.92% 0.65%
BB/Ba
49.11% 54.03%
B/B
33.01% 33.82%
CCC/Caa and below
8.47% 11.51%
Cash & equivalents
3.50% -

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 10/31/2024)
Maturity Range
Fund
0 - 3 years
28.41%
3 - 5 years
47.95%
5 - 10 years
21.79%
10+ years
1.85%

Based on ending weights as of month-end. Percent total may not add to 100% due to rounding.

Holdings

Top Ten Holdings

(as of 11/30/2024)
Security
Fund
CCO Holdings LLC
1.46%
Iron Mountain Incorporated
1.21%
TerraForm Power Operating LLC
1.00%
Iceland Bondco Plc
0.87%
Ford Motor Company
0.86%
SS&C TECHNOLOGIE 6.5% 06/01/32
0.84%
EDGE FINC 8.125% 08/15/31/GBP/
0.83%
ASSUREDPARTNERS INC SR UNSECURED 144A 01/29 5.625
0.76%
NextEra Energy Operating Partners LP
0.74%
TENET HEALTH 6.75% 05/15/2031
0.74%
Top 10 represents 9.32% of total net assets

Based on ending weights as of month-end. Source: FactSet. The information shown is not intended to be, nor should it be construed to be, a recommendation to buy or sell an individual security.

Sector allocation

Sector allocation

(as of 10/31/2024)
Type
Fund
Benchmark
Consumer discretionary
19.66% 19.92%
Communication services
16.00% 15.94%
Consumer staples
14.90% 11.77%
Financials
14.37% 11.00%
Industrials
13.40% 19.68%
Information technology
8.50% 6.08%
Utilities
6.09% 4.12%
Energy
4.79% 9.27%
Real estate
2.22% 2.05%
ABS
0.07% -
Agencies
0.00% 0.17%

Based on ending weights as of month-end. Source: FactSet. Percent total may not add to 100% due to rounding.

Geographic allocation

Geographic allocation

(as of 10/31/2024)
Type
Fund
Benchmark
United States
61.91% 67.07%
United Kingdom
11.38% 5.26%
France
6.93% 5.04%
Italy
6.07% 4.03%
Germany
1.88% 3.08%
Luxembourg
1.85% 1.72%
Canada
1.81% 3.89%
Netherlands
1.54% 1.44%
Spain
1.41% 1.81%
Sweden
0.68% 1.04%

Based on ending weights as of month-end. Source: FactSet. Percent total may not add to 100% due to rounding.

Currency allocation

Currency allocation

(as of 10/31/2024)
Currency
Share Class
Benchmark
British Pound Sterling
7.98% 2.49%
Euro (EUR)
24.50% 21.34%
United States Dollar
67.52% 75.33%

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

Portfolio composition

Portfolio composition

(as of 10/31/2024)
Credit Assets
Allocation
Benchmark
ABS
0.07% -
Corporate bonds
99.93% 99.93%

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

ESG data summary

MSCI Overall ESG Score 1
Portfolio
5.9
Index
5.8
Sustainalytics ESG Risk Score 2
Portfolio
20
Index
23
SFDR Rating
 
8

Product involvement 3

Portfolio Benchmark
Controversial Weapons exposure 0.00% 0.07%
Oil Sands exposure 0.00% 0.04%
Small Arms exposure 0.00% 0.02%
Thermal Coal exposure 0.00% 0.16%
Tobacco exposure 0.00% 0.29%
UN Global Compact non-compliant exposure 0.00% 0.00%

¹ Data is sourced from MSCI ESG Research where companies are rated on a scale of 0 – 10 (0 - worst, 10 - best). Weighted average scores exclude effects of unrated securities.

² ESG Risk Ratings measure exposure to and management of ESG risks. Lower risk scores reflect less ESG risk. Sustainalytics ESG Risk Scores measure ESG risks on a scale of 0 – 100 (0 - no ESG Risk, >40 - Severe ESG Risk).

³ Carbon emissions includes operational and first-tier supply chain greenhouse gas emissions. Data sourced from S&P Trucost Limited.

⁴ Source: Allspring Global Investments. This report contains information developed by Sustainalytics. Such information and data are proprietary of Sustainalytics and/or its third-party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers. Copyright © 2023 Sustainalytics. All rights reserved.

Documents

Literature Date Language
Fact Sheet 10/31/2024 English Download
Fact Sheet 10/31/2024 Italian Download
Fact Sheet 10/31/2024 Spanish Download
Fact Sheet 10/31/2024 German Download
Fact Sheet 10/31/2024 French Download
Fact Sheet 10/31/2024 Korean Download
Fund Profile 6/7/2023 English Download
Monthly Commentary 10/31/2024 English Download
Regulatory Document Date Language
KIID 10/8/2024 English Download
Lux Fund Sustainability-Related Disclosures 10/31/2024 English Download
PRIIPs KIDs 12/4/2024 English Download
PRIIPs KIDs 12/4/2024 Danish Download
PRIIPs KIDs 12/4/2024 Dutch Download
PRIIPs KIDs 12/4/2024 French Download
PRIIPs KIDs 12/4/2024 German Download
PRIIPs KIDs 12/4/2024 Italian Download
PRIIPs KIDs 12/4/2024 Norwegian Download
PRIIPs KIDs 12/4/2024 Portuguese Download
PRIIPs KIDs 12/4/2024 Spanish Download
PRIIPs KIDs 12/4/2024 French Download
PRIIPs KIDs 12/4/2024 Swedish Download
PRIIPs KIDs 10/8/2024 Finnish 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.

Key risks

Debt securities risk: Debt securities are subject to many factors, including, but not limited to, changes in interest rates and an issuer’s ability and willingness to make payments when due.

Global investment risk: Securities of certain jurisdictions may be affected by uncertainties such as international political developments, currency fluctuations and other developments in the laws and regulations of countries in which an investment may be made. These may result in rapid and extreme changes in securities prices.

High yield securities risk: High yield securities are rated below investment grade, have a higher risk of default and prices may be more volatile than higher-rated securities of similar maturity.

ESG risk: Applying an ESG screen for security selection may result in lost opportunity in a security or industry resulting in possible underperformance relative to peers, ESG screens are dependent on third party data and errors in the data may result in the incorrect inclusion or exclusion of a security.

Convertible securities risk: These instruments can be converted into common stock because of the occurrence of certain predetermined trigger events including when the issuer is in crisis resulting in possible price fluctuations and may be subject to redemption at the election of the issuer.

Contingent convertible bonds risk: These instruments can be converted from debt into equity because of the occurrence of certain predetermined trigger events including when the issuer is in crisis resulting in possible price fluctuations and potential liquidity concerns.

Currency risk: Currency exchange rates may fluctuate significantly over short periods of time and can be affected unpredictably by intervention (or the failure to intervene) by relevant governments or central banks, or by currency controls or political developments.

Leverage risk: The use of certain types of financial derivative instruments may create leverage which may increase share price volatility.

Contact Us

We look forward to helping you with your investment needs

 

Investors should note that, relative to the expectations of the Autorité des Marchés Financiers, this fund presents disproportionate communication on the consideration of non-financial criteria in its investment policy.
 

The ongoing charges/total expense ratio (TER) reflects annual total operating expenses for the class, excludes transaction costs and is expressed as a percentage of net asset value. The figure shown is from current KID. The investment manager has committed to reimburse the Sub-Fund when the ongoing charges exceed the agreed upon TER. Ongoing charges may vary over time.
 

Any benchmark referenced is for comparative purposes only, unless specifically referenced otherwise in this material and/or in the prospectus, under the Sub-Funds’ Investment Objective and Policy.
 

†Promotes environmental and social characteristics but does not have a sustainable investment objective
 

†While the Sub-Funds listed above have access to both internal and external ESG research and integrate financially material sustainability risks into their investment decision-making processes, ESG-related factors are considered but not determinative, permitting the relevant Sub-Investment Managers to invest in issuers that do not embrace ESG; as such, sustainability risks may have a more material impact on the value of the Sub-Fund’s investments in the medium to long term. The investments underlying these Sub-Funds do not take into account the EU criteria for environmentally sustainable economic activities.
 

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.

© 2024 Morningstar. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.