Fund Spotlight: A 6% income strategy that doesn’t miss equity rally

• The Allspring Global Equity Enhanced Income Fund has delivered a 6% annual distribution, providing a stable income stream for investors amid today’s volatile market environment.

• The fund maintains meaningful exposure to secular growth leaders in AI and technology, while also employing index-level covered call strategies across global equity indices to generate diversified option premium income.

• This dual-engine approach has enabled the fund to outperform both its benchmark and peer group over the past five years, with an annualised return of 10.8% and a 1-year return of 31.1%.

• From a risk perspective, the strategy demonstrates defensive characteristics, including a lower beta, downside capture of 67%, and smaller drawdowns versus broad global equities.

• Overall, the fund offers a compelling all-in-one solution for investors seeking growth, income, and downside protection within a single portfolio allocation.

The global investment landscape entering 2026 can be defined by one word: uncertainty.

Although global equities rebounded sharply from their March lows, led once again by technology companies, the earlier selloff triggered by Middle East tensions reminded investors how fragile sentiment remains. Markets demonstrated that corporate fundamentals are still resilient, but the path ahead is becoming increasingly complex.

US monetary policy remains a key swing factor. Inflation risks are re-emerging as energy prices rise, potentially limiting the Federal Reserve’s ability to cut rates and even reopening discussions around further tightening. At the same time, developed economies continue to grapple with elevated fiscal deficits and rising sovereign debt burdens, increasing the risk of volatility across bond markets. Meanwhile, extraordinary gains in AI-related and technology stocks have pushed valuations toward historically stretched levels. While the long-term structural growth story remains intact, concerns surrounding concentration risk and potential asset bubbles are becoming harder to ignore.

For investors, this creates a difficult balancing act. Pursuing pure growth leaves portfolios vulnerable to sharp valuation-driven drawdowns during periods of macro stress. On the other hand, relying solely on defensive or high-yield assets risks missing the structural growth opportunities driven by artificial intelligence, semiconductors, and digitalisation.

Against this backdrop, income-oriented investors face an increasingly important question: where can they find reliable and growing income without sacrificing long-term capital appreciation? The Allspring Global Equity Enhanced Income Fund (GEEI) was designed precisely to address this challenge.

Allspring Global Equity Enhanced Income Fund: A smart way to combine income and growth

Managed by Allspring Global Investments, the Allspring Global Equity Enhanced Income Fund seeks to deliver a consistent and high level of income, targeting a 6% annual payout distributed monthly, while also providing long-term capital growth.

Rather than relying on a single yield-heavy asset class, the strategy combines two complementary return engines: a high-quality global equity portfolio together with a systematic options overlay strategy. This hybrid structure allows the fund to generate attractive income while maintaining meaningful participation in global equity upside.

1.      The fundamental equity sleeve (Targeting ~4% Yield Contribution)

The Allspring GEEI Fund is not a conventional dividend strategy. Rather than simply screening for the highest-yielding stocks - an approach that often results in value traps and excessive sector concentration in defensive sector, while potentially missing longer-term growth engines - Allspring seeks to avoid the pitfalls through a disciplined quantitative investment framework reinforced by deep fundamental equity research. The process focuses on companies with strong cash flow generation, healthy profit margins, and sustainable dividend payout policies, aiming to balance income generation with long-term capital resilience.

The result is a high-conviction portfolio of approximately 60 to 80 global equities. Importantly, the strategy remains style-neutral and benchmark-aware. Sector and regional allocations are generally maintained within ±5% of the MSCI All Country World Index (MSCI ACWI). This prevents the portfolio from drifting excessively toward traditional “value traps” or becoming overly defensive.

For regional allocation, the fund’s largest overweight position is Brazil (+3.5%), while the largest underweight is the United States (-3.7%), both comfortably within the strategy’s disciplined allocation framework. The Brazil overweight reflects attractive dividend opportunities in financials and commodity-linked companies such as Petrobras.

At the sector level, real estate represents the fund’s largest overweight exposure, while consumer staples is its largest underweight position.

Figure 1: The fund is overweight Brazil and underweight the US

Figure 2: The fund is overweight real estate and underweight consumer staples

The fund’s top holdings reflect a balanced approach, blending dominant technology franchises with high-quality financials and income-generating multinational companies (Table 1).

Unlike traditional income funds that rely heavily on high-dividend-paying companies to achieve their payout targets, the strategy also maintains meaningful exposure to modest dividend payers and secular growth leaders in technology and AI infrastructure, including Nvidia, Alphabet, and Microsoft.

The mandate further allows up to 10% allocation to non-dividend-paying companies, giving the fund the flexibility to participate in long-term structural winners. For example, Amazon represented a 2.4% holding as of 30 April 2026 despite not paying dividends. Its cloud computing division, Amazon Web Services (AWS), generated USD37.6 billion in revenue in 1Q26, representing 28% year-on-year growth. Supported by continued strength in AI and cloud demand, the company’s share price has gained nearly 20% year-to-date.

Table 1: The fund’s top 10 include mostly dividend paying tech and financials

Holdings	Sector	Fund	Benchmark
NVIDIA Corporation	Information Technology	4.7%	4.9%
Alphabet Inc. Class A	Communication Services	4.0%	2.3%
Apple Inc.	Information Technology	3.2%	4.0%
Microsoft Corporation	Information Technology	2.8%	2.9%
Taiwan Semiconductor Manufacturing Co., Ltd. ADR	Information Technology	2.6%	1.7%
Broadcom Inc.	Information Technology	2.4%	1.9%
Amazon.com, Inc.	Consumer Discretionary	2.4%	2.6%
Samsung Electronics Co., Ltd.	Information Technology	2.0%	-
Citigroup Inc.	Financials	1.8%	-
Sompo Holdings, Inc.	Financials	1.8%	-
Total		27.7%
Source: Allspring Global Investments. Data as of 30 April 2026.

2. The Systematic Options Overlay (Targeting ~2% Yield Contribution)

To bridge the gap between underlying equity yields and its targeted 6% annual distribution, the fund enhances income generation through an actively managed options overlay strategy.

The investment team systematically sells call options to collect premium income.

However, what differentiates Allspring from conventional covered-call strategies is how the options are implemented.

Index-level execution. Rather than writing call options on individual stocks, the fund primarily sells options on broad market indices such as the S&P 500, Euro Stoxx 50, Russell 2000, and MSCI Emerging Markets Index. This distinction is important. By using index-level options, the fund preserves upside participation in individual holdings. If a company such as NVIDIA or Taiwan Semiconductor Manufacturing Company (TSMC) delivers a strong earnings surprise, the stock’s gains are not prematurely capped through single-stock option contracts.

Dynamic exposure management. The overlay is also actively adjusted based on market conditions. In stronger bull markets, the investment team reduces option coverage to allow greater participation in rising equity prices. This flexibility has contributed to the fund’s relatively healthy upside capture ratio of 88.0% over the past three years. The managers also stagger option strike prices and expiries across multiple levels instead of concentrating exposure at a single strike. For example, S&P 500 call options may be written at sequential strike levels such as 6860, 7100, and 7125 (Table 2). This laddering approach helps smooth premium income generation while reducing the risk of the portfolio becoming overly constrained during sudden market rallies.

By harvesting option premiums across multiple regions and indices, the strategy diversifies its income generation beyond a single market environment.

That said, investors should recognise the natural trade-off of covered-call strategies. During aggressive bull markets, such as the strong rally seen in May 2026, the fund may lag a pure long-only equity portfolio as some upside is partially capped by option positions.

Table 2: Examples of option positions

Options contracts

C/O CBOE S P 500 C MAY 6860.00

C/O CBOE S P 500 C MAY 7100.00

C/O CBOE S P 500 C MAY 7125.00

C/O MSCI EMERGING MAY 1585.00

C/O MSCI EMERGING MAY 1680.00

C/O MSCI EMERGING MAY 1695.00

C/O RUSSELL 2000 I MAY 2680.00

C/O RUSSELL 2000 I MAY 2800.00

C/O RUSSELL 2000 I MAY 2860.00

C/O EUREX EURO STOX MAY26 6225

C/O EUREX EURO STOX MAY26 6450

Source: Allspring Global Investments. Data as of 30 April 2026.

Performance: Strong returns with managed volatility

This dual-engine structure has enabled the fund to remain competitive with global equities while consistently outperforming global peers. The Class A Dis USD share class has outperformed both its benchmark and other global equity funds on our platform, across both income- and growth-oriented strategies, underscoring its competitiveness within the broader global equity universe over the past five years (Figure 3).

Figure 3: The fund has demonstrated stronger returns than the benchmark over the past five years

The fund also outperformed the MSCI ACWI benchmark in four out of five full calendar years since inception in July 2020. The only year of relative underperformance was 2023, when AI-driven momentum and the “Magnificent Seven” dominated global equity returns. This is an expected trade-off for covered-call strategies, as option premiums naturally cap part of the upside during highly directional bull markets.

More importantly, the strategy has demonstrated meaningful downside resilience during weaker markets. In 2022, a particularly difficult year for global equities, the fund declined 17.5% compared with the MSCI ACWI’s 18.5% decline (all returns in SGD terms). The option premiums collected helped cushion part of the market drawdown, validating the defensive characteristics of the strategy.

Figure 4: The fund outperformed the benchmark in four out of five calendar years

Several risk metrics stand out. The fund’s downside capture ratio of 67.1% means it captured only around two-thirds of the benchmark’s losses during down markets. Similarly, the strategy’s maximum drawdown over the past five years was -20.9%, lower than both the MSCI ACWI Index (-21.9%) and peer group average (-25.0%). This translates into a smoother investment journey for investors.

The fund’s beta of 0.81 further highlights its defensive characteristics relative to pure equity exposure. For investors concerned about late-cycle market vulnerabilities, the fund’s lower-beta construction provides an added layer of resilience, particularly in the current environment where earnings growth momentum may slow due to rising energy costs, even if the broader economic backdrop remains relatively stable at the moment.

Three reasons to include GEEI in your portfolio

In an investment environment increasingly defined by uncertainty, the Allspring Global Equity Enhanced Income Fund offers a compelling middle ground between growth and income.

First, the strategy provides exposure to the structural growth themes driving global markets, including AI, semiconductors, and cloud infrastructure, rather than sacrificing growth entirely for yield.

Second, the actively managed options overlay enhances portfolio income while also providing meaningful downside cushioning during periods of market stress.

Third, the fund’s lower beta and superior downside capture profile make it a strong candidate for investors seeking a more stable equity allocation without abandoning long-term capital appreciation.

For Singapore-based investors, the fund is available on the iFAST platform in both A Dis USD share class and A Dis SGD-Hedged share class. As of April 2026, the USD share class offered a 12-month distribution yield of 6.2% while SGD-hedged share class offered a yield of 6.1%.

In a world where investors increasingly need both resilience and growth, the Allspring GEEI strategy presents a differentiated approach to generating dependable income without losing sight of long-term equity opportunities.

Declaration:

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.