Bond Index performance July 2016

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For the 4th month in a row Australian bonds performed very well as bond yields fell and the yield curve flattened. The long duration gains favoured government bonds that returned 0.859% for the month, taking their yearly return to 7.28%.

The composite bond index was the next best performer with a monthly return of 0.735% and a rolling 12 month return of 6.42%. Semi government bonds were not far behind with a monthly return of 0.647% and a 12 month rolling return of 6.21%.

Corporate bonds were the laggard for the month but still a respectable 0.574% (12 month return 5.06%). There are fewer long duration corporate bonds and their returns have suffered, compared to government bonds, as a result.

The FRN index returned 0.366% for the month taking its 12 month return to 2.75%, just above the bank bill index of 2.23%. Bank bills returned 0.173% for the month.

bond-index-jul

Bloomberg

Security1m Return (%)12m Rolling Return6m Rolling Return
Bank Bill0.1732.231.12
Composite Bond0.7356.424.47
Government Bond0.8597.285.18
Semi-Govt Bond0.6476.214.31
Corporate Bond0.5745.063.42
FRN0.3662.751.65

bloomberg-index-jul