Conditions remained distressing for global fund managers in March. US Treasury bond yields finished the month significantly higher, especially at the short end, while long-term yields rose noticeably in the UK. Yields in the major euro-zone economies also rose materially. The Aussie dollar was again stronger against the USD, euro, sterling and yen, exacerbating the effects of higher yields. 7 out of 34 funds in the YieldReport survey finished the month with a positive return.
The median 1 month performance in the YieldReport survey of global bond funds in March was -1.88% (February: -1.37%) while the median return over the 12 months including March came to -4.23% (January: -2.41%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -2.42% over the month and -4.72% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield gained 91bps to 2.34% over the month, the 10-year yield added 51bps to 2.34% while the 30-year yield finished 29bps higher at 2.45%. Nevertheless, BBB spreads tightened.
In other major bond markets, the German 10-year bond yield gained 43bps to 0.60% and the French 10-year increased by 38bps to 1.03%. The 10-year UK gilt yield finished the month 25bps higher at 1.62%.
The best performing global fund for the month in the YieldReport March survey was again the T. Rowe Price Dynamic Global Bond Fund. It produced a return of +1.93% for the month following top-returning performances of 0.64% in February and 0.97% in January.
The second-highest return was produced by the Franklin Templeton Multisector Bond (Institutional) Fund. Its return of 0.95% followed February’s second-quartile return of -1.38% and a top-quartile return of 0.20% in January.
In terms of fund performance for the twelve months to the end of March, the Invesco Wholesale Senior Secured Income Fund retained its title as the highest performing fund for a thirteenth consecutive month. The Invesco fund produced a 12-month return of 4.21%, while the Bentham Professional Syndicated Loan Fund took over second place from a sibling fund after it produced a 12-month return of 3.06%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -1.95 | -4.73 | -4.63 | 0.27 | 0.94 | |
| AMP Future Directions International Bond Fund | -2.68 | -6.14 | -5.88 | -0.37 | 0.82 | |
| AMP Capital International Bond | -2.64 | -6.03 | -5.40 | 0.14 | 1.34 | |
| ANZ-CFS Global Credit Income EF | 0.19 | -1.22 | -1.56 | -0.28 | 0.18 | |
| Ardea Real Outcome Fund | 0.46 | -0.76 | -1.98 | 3.19 | 3.78 | |
| Bentham Professional Global Income | mFund | 0.86 | 1.60 | 2.89 | 4.59 | 4.33 |
| Bentham Wholesale High Yield | mFund | -0.75 | -3.93 | -0.55 | 2.82 | 3.52 |
| Bentham Syndicated Loan ASX Class | mFund | 0.06 | -0.08 | 3.06 | 2.81 | 3.25 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.43 | -0.52 | -0.33 | 1.00 | 1.73 |
| BlackRock Wholesale International Bond | -1.84 | -5.55 | -4.76 | 1.15 | 1.99 | |
| CFS Wholesale Global Corporate Bond | -1.97 | -6.56 | -4.61 | 2.30 | 2.73 | |
| Dimensional Five-Year Diversified Fixed Interest | -2.72 | -4.60 | -6.03 | -1.15 | 0.25 | |
| Dimensional Global Bond Trust | -3.23 | -6.78 | -5.30 | 0.48 | 1.89 | |
| Dimensional Two-Year Diversified Fixed Interest | -1.30 | -2.16 | -2.98 | -0.16 | 0.63 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -1.78 | -6.06 | -5.71 | 0.28 | 1.38 | |
| Franklin Templeton Multisector Bond (Institutional) | 0.95 | -0.24 | -2.45 | -5.22 | -3.22 | |
| Invesco Wholesale Senior Secured Income | mFund | -0.03 | -0.07 | 4.21 | 3.70 | 3.59 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 0.70 | -0.71 | -0.42 | 2.97 | 2.73 |
| Legg Mason Western Asset Global Bond Fund | -2.96 | -6.45 | -4.78 | 1.37 | 2.16 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -10.38 | -18.80 | -11.34 | -2.09 | 0.37 | |
| Macquarie Global Income Opportunities Fund | -1.10 | -2.54 | -1.23 | 1.54 | 2.22 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -4.32 | -7.64 | -6.32 | -0.04 | 2.35 | |
| Mercer Global Credit Fund | -1.94 | -6.40 | -4.54 | 1.47 | 2.25 | |
| Mercer Global Sovereign Bond Fund | -1.09 | -3.63 | -2.90 | 1.45 | 2.74 | |
| PIMCO Global Bond (Wholesale) | mFund | -1.93 | -4.65 | -4.12 | 1.49 | 2.35 |
| PIMCO Global Credi (Wholesale) | mFund | -2.43 | -5.65 | -4.30 | 1.11 | 2.05 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -2.88 | -5.39 | -5.06 | 0.56 | 1.97 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -1.70 | -3.56 | -4.17 | 1.03 | 1.74 |
| State Street SSgA Global Fixed Income Trust | -2.24 | -4.88 | -4.21 | 0.60 | 1.78 | |
| T.Rowe Price Dynamic Global Bond Fund | 1.93 | 3.57 | 0.92 | 4.10 | 2.68 | |
| UBS Global Credit Fund | -2.36 | -7.22 | -5.23 | 1.78 | 2.57 | |
| UBS International Bond | -1.81 | -5.03 | -4.18 | 0.80 | 1.94 | |
| Vanguard International Credit Securities Index (Hedged) | -2.20 | -6.53 | -4.90 | 0.96 | 2.07 | |
| Vanguard International Fixed Interest Index (Hedged) | -2.15 | -4.57 | -4.24 | 0.31 | 1.58 |