Climate Transition Global Investment Grade Credit Fund

£101.49
NAV
-£0.08 / -0.08%
$43.6M
Fund assets
Not available
Distribution yield
Not available
Year-to-date return
Data as of 7/22/2024
Prioritise transition over exclusion
The Climate Transition Global Investment Grade Credit Fund seeks to deliver total returns, consisting of a high level of 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 investment grade credits, designed to balance financial and climate objectives.

Key differentiators

  • Provides access to the full range of credit opportunities represented by rapid, large-scale decarbonisation and a global, sector-wide transition
  • Takes advantage of a fully integrated worldwide fixed income offering, balancing global portfolio construction and in-market local coverage
  • Focuses on companies’ forward transition performance, in the strong belief that some of today’s heaviest emitters will be tomorrow’s decarbonisation outperformers
  • Uses a proprietary ESGiQ (ESG Information Quotient) rating system to capture key issues that may be mispriced

General facts

ISIN

LU2810383468

SEDOL

BN13RQ3

Bloomberg

ALXGSGA LX

SFDR classification

8

Minimum investment

$

Fund inception date

11/8/2019

Share class launch date

5/21/2024

Annual management fee

0.20%

Total expense ratio (TER)

0.35%

Benchmark name

Bloomberg Global Aggregate Corporate Index (USD Hedged)

Settlement

T+2

Q2 2024 manager update

Watch Henrietta Pacquement, senior portfolio manager, head of Global Fixed Income and head of Sustainability, discuss fund performance and positioning in a quarter where politics stole the show over central banks, and reflect on key trends in how investors are tackling the climate transition question in fixed income.

Transcript

How did the fund perform in Q2? What worked well and what didn’t?

Henrietta Pacquement: Politics stole the show over central banks in the second quarter. With half the world population voting in 2024, we always knew that the electoral cycle was something to watch throughout the year and it didn't disappoint in Q2. We even got an extra unexpected legislative election in France, which provided one of the more interesting market moves in the investment grade space during what was largely an uneventful period for the asset class. In that context, the fact that the European Central Bank (ECB) cut rates went almost unnoticed as it was well flagged. The ECB is now the second major developed market central bank to do so, signaling that they believe inflation is coming under control. We expect rates to remain rangebound around current levels for the rest of the year. So, how did that play out in our portfolio? Over the quarter, the Climate Transition Global Investment Grade Credit Fund I Share Class was marginally behind its benchmark on a net basis by 7 basis points and in line on a gross basis. This is reflective of the fund's risk profile that is close to benchmark from a macro perspective, given current attractive overall yield levels and lower than average credit spreads. That translates into a duration close to 6, a continued tilt to financials, though, that has been reducing over time and then underweight to more cyclical sectors. A modest underweight to French assets pre-election offered space to add through the modest volatility patch experience in June. In particular, EDF chose to issue post the first round of the elections and had to come at 200 basis points for their 20-year offering in which we participated, subsequently harvesting 20 basis points running of spread performance. From a bottom up perspective, we continue to see a broadening of climate-related funding initiatives. A recent example harnesses technology infrastructure development with home heating. Microsoft is developing data hyper-centers in the Nordics and collaborating with local utilities to harvest waste heat to use in district heating networks. We think this ecosystem approach is key to managing the transition in years to come and will deliver financial results for investors.

We have seen increased interest from investors seeking climate transition fixed income strategies. Why do you think that is?

Henrietta Pacquement: We continue to see a positive evolution in how investors are tackling the climate question in fixed income. Lessons learned over the last few years are translating into more sophisticated approaches that should see more allocations to this space in the short to medium term. Two trends we think are of particular interest are continuing to emerge. The first is an increasing understanding that the focus needs to be on facilitating the transition of the real economy rather than just decarbonizing portfolios and using exclusions. It's been great to see this trend being reinforced in the Net Zero Investment Framework 2.0 guidance that was published by the Institutional Investors Group on Climate Change in late June. The second is that there's an increasing understanding of the engagement opportunities in the fixed income space, given the asset class’s unique specificities. Fixed income investors have frequent and natural touchpoints to express their views and convey expectations from a climate perspective through the new issue processes, for instance. These are useful feedback aggregation points for the companies themselves to track their sustainability progress and home their climate strategies. These trends align with Allspring's Climate Transition Credit approach, which we launched over three years ago now and has reached some $5 billion in assets under management.

Performance

Past performance is not indicative of future results.

Calendar year

Calendar year

For regulatory reasons, we are unable to show performance until there is a 12 month performance record.
Average annual returns

Average annual returns

For regulatory reasons, we are unable to show performance until there is a 12 month performance record.
Cumulative

Cumulative

For regulatory reasons, we are unable to show performance until there is a 12 month performance record.
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 £101.95 7/17/2024
YTD low £99.03 5/29/2024
52-week high £101.95 7/17/2024
52-week low £99.03 5/29/2024
2023 high -
2023 low -

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 6/30/2024)
Fund Benchmark
Number of Holdings 278 16437
Number of Issuers 199.00 2,438.00
Effective Duration 5.90 5.98
Weighted Average Effective Maturity 9.17 8.83
Average Credit Rating A- A-
Average Maturity 10.32 9.55
Credit Spread Duration 6.09 6.06

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 6/30/2024)
Type
Fund
Benchmark
AAA/Aaa
0.51% 0.95%
AA/Aa
13.66% 8.02%
A/A
38.05% 43.43%
BBB/Baa
44.71% 47.59%
BB/Ba
0.97% -
Cash & equivalents
2.11% -

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 6/30/2024)
Maturity Range
Fund
0 - 3 years
17.11%
3 - 5 years
19.11%
5 - 10 years
45.09%
10+ years
18.71%

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

Holdings

Top Ten Holdings

(as of 6/30/2024)
Security
Fund
US Treasuries
3.00%
US TREASURY N/B
1.43%
US TREASURY N/B
1.20%
Intercontinental Exchange, Inc.
1.06%
US Treasuries
0.97%
Bank of America Corporation
0.94%
US Treasuries
0.94%
Pfizer Investment Enterprises Pte. Ltd.
0.86%
HSBC Holdings Plc
0.85%
Motorola Solutions, Inc.
0.77%
Top 10 represents 12.01% 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 6/30/2024)
Type
Fund
Benchmark
Financials
36.81% 36.29%
Consumer staples
10.82% 13.41%
U.S. treasuries
9.84% -
Information technology
8.57% 6.30%
Communication services
8.28% 7.28%
Consumer discretionary
6.00% 7.97%
Energy
5.64% 7.09%
Utilities
3.95% 7.70%
Real estate
3.23% 2.61%
Industrials
2.80% 11.35%
Agencies
2.71% -
Local authorities
1.36% -

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 6/30/2024)
Type
Fund
Benchmark
United States
58.82% 57.33%
United Kingdom
5.23% 7.07%
France
5.18% 6.17%
Switzerland
3.65% 1.56%
Netherlands
3.54% 1.72%
Germany
3.48% 4.52%
Spain
2.93% 2.01%
Australia
1.91% 2.20%
Japan
1.72% 2.55%
Canada
1.38% 4.99%

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 6/30/2024)
Currency
Share Class
Benchmark
British Pound Sterling
4.33% 4.06%
Euro (EUR)
25.54% 23.45%
United States Dollar
70.13% 67.56%

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 6/30/2024)
Credit Assets
Allocation
Benchmark
U.S. treasuries
9.84% -
Corporate bonds
90.16% 100.00%

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
6.7
Index
6.8
Sustainalytics ESG Risk Score 2
Portfolio
21
Index
22
SFDR Rating
 
8

Product involvement 3

Portfolio Benchmark
Controversial Weapons exposure 0.00% 1.50%
Oil Sands exposure 0.00% 0.14%
Small Arms exposure 0.00% 0.05%
Thermal Coal exposure 0.00% 1.05%
Tobacco exposure 0.00% 1.00%
UN Global Compact non-compliant exposure 0.00% 1.02%

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
Fund Profile 12/31/2023 English Download
Monthly Commentary 5/31/2024 English Download
Regulatory Document Date Language
KIID 5/21/2024 English Download
Lux Fund Sustainability-Related Disclosures 4/16/2024 English Download
PRIIPs KIDs 5/21/2024 English Download
PRIIPs KIDs 5/21/2024 French Download
Our team
Meet the investment team

The team’s global bond strategies target outperformance through interest rate and currency positioning. The credit-focused strategies target outperformance via security selection.

Key risks

Asset-backed securities risk: Asset-backed securities may be more sensitive to changes in interest rates and may exhibit added volatility, known as extension risk, and are subject to prepayment risk.

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.

Debt securities risk: Debt securities are subject to credit risk and interest rate risk and are affected by an issuer’s ability to make interest payments or repay principal when due.

Global investment risk: Securities of certain jurisdictions may experience more rapid and extreme changes in value and 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.

High yield securities risk: High yield securities are rated below investment grade, are predominantly speculative, have a much greater risk of default and 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.

Emerging markets risk: Emerging markets may be more sensitive than more mature markets to a variety of economic factors and may be less liquid than markets in the developed world.

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

US Government obligations risk: Securities issued by US Government agencies or government sponsored may not be backed by the full faith and credit of the US Government and may be negatively impacted by adverse market and credit events.

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.