Plus Fixed Income Team

Janet Rilling: We think that there are three key differentiators to our process. The first is a six-month outlook. We look ahead a couple quarters, 2 to 3 quarters, rather than taking a much longer 3-to-5 year outlook. We do this because we think it's easier to find inflection points. In addition, it's a bit easier to see where markets are going when you look out around the corner rather than trying to predict a whole cycle. I think it also allows us to be more nimble and we're ready to make changes in the portfolio, which is valuable considering how often markets move in unpredictable ways. The second key differentiator is our use of multiple levers. We employ both an approach of investing in the core sectors and also the plus sectors across a range of strategies by calibrating the amount of core and plus, depending on the investment objective. But within each parts of the portfolio, there are additional levers. In the core part of the portfolio, we can move around our duration and curve positioning, our sector weights, which includes treasuries, investment grade credit, and structured product. And then in the plus part of the portfolio, we cast a wider net. We look at all the global fixed income sectors. Those range from U.S. high yield to European investment grade and high yield, emerging markets, foreign currency, and global government bonds. And then our last differentiator is an unbiased approach. We don't want to be anchored or have structural biases built in the portfolio. Rather, we want to move to where we see value in the market and not stay stuck in one particular position. That unbiased approach is implemented in a way to achieve more diversified sources of alpha and a steadier return stream.

Chris Lee: High yield investing is about capturing returns that high-starting yields advertise by avoiding large negative outcomes that coincide with defaults. There are three elements to our approach to high yield that we believe sets us apart from others and promotes alpha-generating security selection. First, we emphasize a six-month horizon in all aspects of our investment process. This has enabled us to identify catalysts and anticipate inflection points, whether that's in individual credits, sector fundamentals, or across the high yield market. Employing a six-month horizon compels us to constantly reevaluate and test our investment thesis, which helps us discover early signs of the possibility of companies defaulting on their debt. Second, we harness the resources available to us from across the Allspring Plus team to develop investment themes. We then apply these thematic levers across the quality and duration spectrums in the leveraged finance universe and within individual sectors and capital structures. Third, we maintain an unbiased approach throughout our investment process, especially in security selection. This helps drive alpha diversification and encourages us to think critically about company fundamentals and bond performance and enables us to have the mindset necessary to anticipate change. These three unique elements to our approach are what we call the U.S. high yield differentiators and together, our three differentiators enable us to deliver our value proposition: identifying the best risk/reward and high yield, avoiding the downside that comes with the defaults, and realizing in returns the attractive yields advertised by the high yield market. The proof in our ability to deliver on this value proposition is in our track record, which we are very proud of.