Investors searching for a reliable government mortgage-intermediate bond fund might find Allspring Core Plus Bond A (ticker: STYAX) a worthy candidate. This fund is rated a Zacks Mutual Fund Rank of 2 (Buy), indicating it has solid prospects based on size, cost, and past performance metrics.
Fund Objective and Investment Focus
STYAX belongs to the Government Mortgage – Intermediate fund category. These funds invest mainly in mortgage-backed securities (MBS), which are bundles of home loans packaged together and sold as investment products.
Specifically, STYAX targets MBS with maturities between three and ten years. This medium-term focus aims to balance risk and return, offering moderate income with less sensitivity to interest rate changes than longer-term bonds.
Fund History and Management
Launched in July 1998, STYAX is managed by Allspring Global Investments, headquartered in San Francisco. The fund currently oversees approximately $347 million in assets. A team of experienced investment professionals manages the portfolio, aiming to optimize returns while controlling risk.
Performance Analysis
- 5-Year Annualized Return: 0.29%, ranking in the middle third of its peer group.
- 3-Year Annualized Return: 1.73%, placing it in the lower third of comparable funds.
These returns reflect moderate growth, consistent with the fund’s conservative investment style. It is important to note that these figures do not include all fees, such as sales charges, which would reduce net returns.
Risk and Volatility
STYAX has demonstrated lower volatility than its peers, which is attractive for risk-conscious investors:
- 3-Year Standard Deviation: 7.38% (versus 12.46% category average)
- 5-Year Standard Deviation: 6.51% (versus 12.04% category average)
Standard deviation measures how much the fund’s returns fluctuate. A lower number means more stable performance. Additionally, STYAX’s beta of 0.95 shows it is slightly less volatile than the overall fixed income market. The fund also boasts a positive alpha of 1.28, indicating it has outperformed its benchmark on a risk-adjusted basis.
Credit Quality
Credit quality is crucial for bond investors because it reflects the likelihood that issuers will repay their debts. STYAX maintains a high-quality portfolio:
- 57.99% of holdings rated ‘AA’ or higher (very high credit quality)
- 27.17% rated between ‘A’ and ‘BBB’ (medium quality)
- Average credit rating: ‘A’
This focus on higher-rated bonds helps reduce default risk and supports stable income.
Expenses and Investment Minimums
Costs are a key factor in mutual fund investing. STYAX charges an expense ratio of 0.81%, which is slightly below the category average of 0.89%. However, it is a load fund, meaning investors may pay sales charges when buying shares. The minimum initial investment is $1,000, with subsequent investments requiring at least $100.
Summary
Allspring Core Plus Bond A (STYAX) offers a balanced mix of moderate returns, lower volatility, and high credit quality at a competitive cost. Its Zacks Mutual Fund Rank of 2 (Buy) supports its potential as a solid choice for investors seeking steady income from government mortgage-backed securities with intermediate maturities.
Investors should weigh the fund’s moderate returns against its stability and quality. Also, consider the impact of sales loads and other fees on net performance. For those interested, comparing STYAX to other funds in the Government Mortgage – Intermediate category can provide additional insight.
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