Bond Index performance August 2016

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August is the fifth month in a row that fixed interest indices have yielded positive returns. In fact since November 2015 only one month has returned negative numbers (March 2016). The themes remain the same – uncertainty and quantitative easing driving bond investment. The RBA cut the cash rate 25bps to 1.50% in early August and this was the catalyst for bond yields in Australia falling despite international benchmark bond yields mostly moving higher across the month.

The best performing segment for August was the composite bond index. It returned 0.73% and this was largely from the higher ‘carry’ of corporate bond yields. The FRN index was the next best performer at +0.45% follwed by the corporate bond index at +0.42%. Semi government bonds generated +0.36% closely follwed by government bonds at +0.34%. Bank bills returned their steady +0.17%.

The rolling 12 month returns show that government bonds are still the top performer with 6.86% over the 12 months to the end of August 2016.

Aug 16 BB bond indices histogram

 

Bloomberg

Security1m Return (%)12m Rolling Return
Bank Bill0.1692.22
Composite Bond0.4226.19
Government Bond0.3406.86
Semi-Govt Bond0.3566.05
Corporate Bond0.7265.25
FRN0.4513.02

 

Aug 16 BB bond indices