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Global Bond Funds October 2017

The median 1 month performance in the YieldReport survey of global bond funds was +0.46% (previously -0.19%) and the median return over the last 12 months was 3.00% (previously 1.73%).

October was kind to global bond funds except those with large U.S. exposures. An additional boost to fund returns came in the form of a weaker Australian dollar which managed to fall for a second month in a row against all major currencies. 34 of 42 funds in the YieldReport survey produced positive returns for the month.

Reports of more North Korean missile test drove yields lower as investors headed for the relative safety of bonds in the early stages of the month. Political uncertainty in Europe (Catalonia) added to investor demand for safe haven assets, as did the release of the FOMC minutes and U.S. September CPI figures. U.S September retail figures , stronger consumer sentiment and passage of the 2018 budget through the U.S. Senate sent U.S. yields higher while U.K yields dropped despite a headline inflation rate of 3.0%. Towards the end of the month, a dovish plan for European withdrawal of ECB bond purchases sent German yields lower while U.S yields also dropped despite higher-than-expected U.S third quarter GDP figures. September quarter PCE was in line with expectations but U.S. yields fell anyway.

By the end of the October U.S. yields were up a modest amount while European yields had lost anywhere from a few basis points in the U.K to nearly 30bps in “peripheral” markets. U.S. 10 year bond yields added 4bps to 2.37% while the yield on U.K 10 year gilts fell 3bps to 1.33%, German bund yields decreased by 10bps to 0.36%, French yields fell by 12bps to 0.62% and Italian yields dropped 29bps to 1.82% (most of which occurred in the last week).

The best performing global fund for August in the YieldReport survey was Bentham’s Professional Global Income fund. Its return of 1.01% follows a similar return in September (+1.05%) and a near worst-in-class result in August (-0.12%). The second-highest return of 0.88% was produced by PIMCO’s PIMCO Diversified Fixed Interest Wholesale fund.

In terms of fund performance for the twelve months to October 2017, Bentham’s Wholesale High Yield fund took the honours with a return of 10.77%. This fund had 97.2% of its assets in high yield (sub investment grade) bonds and it has an interest rate (modified) duration of 3.95 and credit duration of 4.03.

GLOBAL BOND FUNDS

GLOBAL BOND FUNDSASX
mFund
1m (%)3m (%)1y (%)3y (%)5y (%)
Advance Australian Fixed Interest Multi-Blend Fund0.500.791.302.233.10
Alpha Diversified IncomemFund0.450.361.822.712.93
AMP Future Directions International Bond Fund0.380.721.233.003.80
AMP Capital International Bondn/a0.851.753.534.34
ANZ-CFS Global Credit Income EF0.470.804.532.813.71
Bentham Professional Global IncomemFund1.011.9410.105.637.49
Bentham Wholesale High YieldmFund0.481.5410.777.368.39
Bentham Syndicated Loan ASX ClassmFund0.781.958.316.277.07
Kapstream Wholesale Absolute Return IncomemFund0.440.873.113.143.71
BlackRock Monthly Income0.751.365.934.006.07
BlackRock Wholesale International Bond0.210.842.374.375.21
BT Global Fixed Interest Wholesale0.280.55-0.203.554.23
BT Institutional Enhanced Global Fixed Interest0.300.600.003.744.41
CFS Wholesale Global Bond0.410.770.383.524.19
CFS Wholesale Global Corporate Bond0.761.314.645.235.94
Dimensional Five-Year Diversified Fixed Interest0.300.461.863.633.68
Dimensional Global Bond Trust0.741.092.344.94
Dimensional Two-Year Diversified Fixed Interest0.160.301.922.362.66
Franklin Templeton Global Aggregate Bd W-0.080.20-1.043.06
Franklin Templeton Multisector Bond I-0.430.847.141.634.45
GAM Absolute Return Bond (AU)-0.360.345.613.513.52
Invesco Wholesale Senior Secured IncomemFund0.541.045.495.094.26
Legg Mason Brandywine Global Opp Fixed Income AmFund-1.49-0.684.453.976.48
Legg Mason Brandywine Global Fixed Income A-1.43-0.894.423.535.95
Legg Mason Western Asset Global Bond Fund0.080.58
Legg Mason Western Asset Macro Opportunities Bond Fund-0.960.5710.75
Macquarie Global Bond0.380.42-0.433.284.15
Macquarie Global Income Opportunities Fd0.681.084.783.303.87
Mercer Global Credit Fund0.670.903.404.795.45
Mercer Global Sovereign Bond Fund0.641.352.345.395.81
Nikko AM International Bond0.470.651.044.214.93
Omega Global Corporate Bond0.560.812.444.244.15
PIMCO Global Bond WholesalemFund0.511.434.035.535.62
PIMCO Global Credi WholesalemFund0.491.173.855.135.32
PIMCO Diversified Fixed Interest WholesalemFund0.881.142.894.724.79
PIMCO Unconstrained Bond WholesalemFund0.291.365.733.61n/a
State Street SSgA Global Fixed Income0.460.930.793.464.41
T.Rowe Price Dynamic Global Bond Fund-0.060.730.194.52
Templeton Global Bond Plus W-0.480.836.250.702.80
UBS Global Credit Fund0.691.444.635.235.47
UBS International Bond0.721.251.984.414.70
Vanguard International Credit Securities Index Hdg0.671.283.344.754.95
Vanguard International Fixed Interest Index Hdg0.520.830.784.284.83

*End of October 2017. Returns in AUD after fees.

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