In the third quarter of 2025, the Allspring Mid Cap Growth Fund delivered a robust performance, successfully outpacing the Russell Midcap Growth Index. This strong showing was largely attributed to astute security selection within the healthcare and information technology sectors, complemented by several well-chosen financial holdings. Despite these gains, certain positions in communication services and financials, alongside a particular IT investment, experienced setbacks that slightly hindered overall returns. The fund's investment philosophy centers on identifying and investing in dynamic growth businesses poised for sustained long-term compounding, employing a meticulous bottom-up analytical approach.
The Allspring Mid Cap Growth Fund adheres to a core investment strategy designed to capitalize on opportunities arising from evolving market dynamics. This strategy, termed the "right side of change," emphasizes identifying companies that are well-positioned for future growth and innovation. By focusing on robust businesses, the fund aims to generate consistent long-term returns for its clients.
A critical component of the fund's approach is its reliance on fundamental "edge" through an all-cap bottom-up analysis. This involves in-depth research into individual companies across all market capitalizations, seeking to uncover instances where the market may be underestimating their future growth potential. This detailed, company-specific analysis allows the fund managers to make informed decisions that are not solely dependent on broad market trends.
Specifically, the fund's outperformance in the third quarter was significantly boosted by its selections in the healthcare sector. These investments likely included innovative pharmaceutical companies, advanced medical device manufacturers, or emerging biotechnology firms that experienced substantial growth during the period. Similarly, strategic picks within the information technology sector, possibly involving software providers, cloud computing services, or cybersecurity specialists, also contributed positively.
The financials sector also played a role in the fund's success, with certain holdings delivering strong returns. These could have been regional banks with solid balance sheets, fintech companies disrupting traditional financial services, or insurance providers with growing market shares. The careful selection of these assets underscored the fund’s ability to find value and growth across diverse industries.
However, the quarter was not without its challenges. The report highlighted that some investments within communication services and financials, along with a specific information technology position, acted as detractors. This indicates that while the overall strategy was successful, some individual holdings faced headwinds, illustrating the inherent risks and complexities of growth investing.
The Allspring Mid Cap Growth Fund continues to pursue its objective of delivering long-term compounding by identifying and investing in robust growth businesses positioned on the "right side of change." The fund's managers leverage a fundamental, bottom-up research approach to uncover market mispricings of future growth, aiming to provide superior returns through careful security selection across various sectors, as evidenced by its recent outperformance despite some challenging positions.