Allspring Strategic Municipal Bond Fund Q4 2024 Commentary

Summary

• Municipal bonds outperformed taxable fixed income in Q4, with high yield bonds performing best and high-grade AAA-rated bonds the weakest.
• Municipal to Treasury ratios remain rich but transactable for higher tax brackets; 30-year ratio is the cheapest relative to taxable fixed-income.
• The Allspring Strategic Municipal Bond Fund outperformed its benchmark, the Bloomberg Short/Intermediate Municipal Bond Index, for the three-month period that ended December 31, 2024.
• Security selection and credit quality were the largest drivers of outperformance while duration and yield-curve positioning were negative.

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Market review

Municipal returns were negative for the fourth quarter, but outperformed taxable fixed income; with the Bloomberg Municipal Bond Index returning -1.22%, Treasuries -3.14%, corporates -3.04% and the Bloomberg U.S. Aggregate Bond Index -3.06%. Within municipal credit tiers, high yield bonds performed best (-1.08%); while high grade AAA-rated bonds and lower-rated