June 2015

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Global fixed interest June fund performance
June was a tough month for bond funds everywhere with benchmarks in the important zones rising between 20-30bps over the course of the month. In some cases, intra-month yields were also extremely volatile. For instance, in the market for German 10 year bonds, rates ended May at 0.49%, doubled to 0.99% on 10 June before settling at 0.76% at the end of the month. Other areas were not as volatile but rates still rose and in the US, 10 year rates rose 21bps to 2.35% while UK 10 year rates rose 21bps to 2.03%. Over the entire year, German 10 rates went from 1.24% to 0.76%, US 10 years rates went from 2.53% to 2.35% and UK rates went from 2.67% to 2.03%.

Most funds in the survey reported negative returns for June with the average coming in at -1.03% for the month. The best performer under these difficult conditions was DDH’s Global Fixed Interest Alpha fund with a June return of 0.66%. This fund is managed by QIC and uses both physical and derivatives positions within the portfolios to generate active returns. QIC’s investment strategy is to add value by taking advantage of short term pricing discrepancies when markets deviate from a fundamental ‘fair value’.

Over the year to June the best performer was Legg Mason’s Brandywine Global Fixed Income with a return of 8.91%. While most funds surveyed had positive returns for the year, the average was 4.30%, so the Brandywine fund’s result stands out. The manager has a “value” investment philosophy and seeks to add value through investing in bonds with the highest real return while taking advantage of currency movements.

GLOBAL BOND FUNDS1m (%)3m (%)1y (%)3y (%)5y (%)
Advance Int Fix Intr Multi-Blend 4-1.31-2.273.284.976.01
AMP Capital FD Intl Bond A 3-1.07-1.634.025.205.99
AMP Capital International Bond 4-1.02-1.504.565.786.46
ANZ OA IP-CFS Global Credit Income EF 17-0.250.401.135.205.18
Bentham W/S Global Income 10.021.503.4510.54
Bentham W/S High Yield 21 -0.971.123.9611.93
Bentham Syndicated Loan ASX Class 17 -0.121.895.389.81
BlackRock Monthly Income C 17 -0.270.452.609.898.75
BlackRock WS International Bond 7 -1.29-2.154.786.337.05
BT Global Fixed Interest WS 16 -1.85-3.596.675.446.18
BT Institutional Enhanced Gbl Fixed Int 16 -1.81-3.536.875.626.95
CFS Wholesale Global Bond 15 -1.02-2.324.735.225.81
CFS Wholesale Global Corporate Bond4-1.33-1.634.077.759.30
DDH Global Fixed Interest Alpha 17 0.661.58-1.054.302.44
Dimensional Five-Year Diversified F/I-0.34-0.024.334.446.03
Dimensional Global Bond Trust 4 -1.25-1.745.775.630.00
Dimensional Two-Year Diversified F/I0.140.492.843.184.07
Fidelity Global Strategic Bond 4 -1.34-1.653.830.000.00
Franklin Templeton Global Aggregate Bd W 4 -1.45-3.246.910.000.00
Franklin Templeton Multisector Bond I 11 -1.34-0.05-0.088.6110.22
GAM Absolute Return Bond (AU) 12 0.472.41-0.563.435.69
Legg Mason Brandywine Glbl Opp Fix Inc A 15 -2.49-3.937.349.420.00
Legg Mason Brandywine Global Fixed Inc A 15 -2.33-3.768.919.2110.19
Legg Mason WA Glb Multi Str Bd A-1.78-0.834.016.207.72
Macquarie Global Bond 13** -1.70-3.665.935.156.44
Macquarie Global Income Opportunities Fd 17 -0.110.392.395.135.43
Mercer Global Credit Fund 2 -1.28-1.714.397.168.70
Mercer Global Sovereign Bond Fund 16 -1.43-2.897.896.517.23
Nikko AM International Bond 16 -1.18-2.415.385.906.21
Omega Global Corporate Bond 17 -1.01-0.993.915.466.96
PIMCO EQT Wholesale Global Bond 9-1.24-2.275.896.568.22
PIMCO EQT Wholesale Global Credit B 20 -1.35-1.534.996.137.64
SSgA Global Broad Invest Grade Fixed Inc 14 -1.10-1.774.915.326.71
SSgA Global Fixed Income 15 -1.15-2.243.494.903.85
T.Rowe Price Dynamic Global Bond Fund 17 0.122.714.860.000.00
Templeton Global Bond Plus W 16 -1.36-0.230.766.077.78
UBS Global Credit Fund 4 -1.62-2.263.976.798.11
UBS International Bond 4 -1.21-2.045.105.556.76
Vanguard International Crdt Secs Idx Hdg 8 -1.31-1.954.275.897.35
Vanguard International Fxd Intr Idx Hdg 10 -1.04-2.046.045.666.76
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 BENCHMARKS
150% BB AusBond Composite Bond Index /50% BB AusBond Bank Bill Index
260% Barclays Global Aggregate - Corporate Index in $A (Hedged) and 40% Barclays Capital Global Aggregate ex Government ex Treasuries Index ($AUD hedged)
3BarCap Gl Aggregate TR ($AUD hedged)
4Barclays Capital Global Aggregate Bond Index ($AUD Hedged)
5Barclays Capital World Government Inflation-Linked Bond Index ($AUD hedged)
6Barclays Glb Agg Corp ($AUD hedged)
7Barclays Global Aggregate 500 Index ($AUD hedged)
8Barclays Global Aggregate Government-Related and Corporate ($AUD hedged)
9Barclays Global Aggregate Index ($AUD hedged)
10Barclays Global Treasury Index ($AUD hedged)
11Barclays Multiverse Index is the primary benchmark
12Cash Index: AFMA 3-month bank bill swap rate BBSW (Hurdle)
13Citigroup (Customised Benchmark) M1 Global ex-Australia hedged to Australian dollars Index
14Citigroup World Broad Investment Grade ex-Australia Index ($AUD hedged)
15Citigroup World Government Bond Index ex Australia ($AUD hedged)
16JP Morgan Global Government Bond Index ($AUD hedged)
17BB AusBond Australia Bank Bill Index
18Credit Suisse Leverage Loan Index ($AUD hedged)
19Consumer Price Index increases by at least 0.5%
20BB AusBond Composite Bond Index
21Merrill Lynch High Yield Cash Pay Constrained ($AUD hedged)

*End of June 2015. Returns in AUD after Fees.
Underlined Funds can be applied for and redeemed via the ASX mFund platform

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