The 10-year Australian Treasury bond yield starting the new year with fall and this set the tone for much of the month. Yields fell consistently and, on some days, substantially until the last week or so of the month when yields trended moderately higher. By the end of January, the 3-year ACGB yield had lost 40bps to 3.19%, the 10-year yield had shed 52bps to 3.56% while the 20-year yield finished 42bps lower at 4.94%.
As a result, conditions facing fund managers in January were transformed from trying times of December to terrific. The Treasury Index, representing Commonwealth bonds, was the best performer after it returned 2.94% for the month. The Semi-Government Index produced the second-highest return of 2.91%, while the Composite Index, representing a mix of federal, state and corporate bonds, was next with a return of 2.76%. The Corporate Bond Index returned 2.19% and the FRN Index returned 0.42%.
All 31 managers in the YieldReport survey produced positive results and the month’s median return was 2.78%.
Legg Mason Western Asset Australian Bond Trust produced a return of 3.21% in the January survey, making it the highest returning fund for the month. The Henderson Australian Fixed Interest (Institutional) Fund’s return of 3.18% was the next-highest while the UBS Australian Bond Fund was third with a return of 3.13%.
On a 12-month basis, the Realm Strategic Income Fund (Enduring Units) retained its title as the highest performing fund. The Realm fund returned 5.92% while the next highest return again came from the Alexander Credit Opportunities Fund with a return of 5.25%. Realm’s High Income (Wholesale) Fund took over third position from Spectrum’s Strategic Income Fund with a 12-month return of 2.08%.
AUSTRALIAN FIXED INTEREST FUNDS
| AUSTRALIAN FIXED INTEREST | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance Aus Fixed Intr Multi-Blend | 2.98 | 2.48 | -7.81 | -3.55 | -0.02 | |
| AMP Capital Corporate Bond | ACA02 | 0.78 | 1.74 | 0.29 | 1.20 | 1.79 |
| Alexander Credit Opportunities Fund | 0.60 | 1.70 | 5.25 | 4.66 | 4.94 | |
| AMP Flex Lifetime S2-AMP Australian Bond | 2.76 | 2.46 | -7.94 | -3.48 | 0.34 | |
| AMP Generations BlackRock Aust Fixed Interest Index | 2.73 | 2.03 | -7.21 | -3.78 | 0.00 | |
| Altius Sustainable Bond Fund | 1.92 | 2.44 | -2.14 | -1.29 | 0.35 | |
| Artesian Corporate Bond Fund | 1.10 | 2.35 | -0.12 | 0.93 | 1.91 | |
| Pendal Enhanced Credit (Wholesale) | 2.08 | 2.71 | -4.15 | -1.16 | 1.55 | |
| Pendal Fixed Interest (Wholesale) | 2.84 | 2.52 | -6.79 | -2.77 | 0.92 | |
| Pendal Government Bond | 2.99 | 2.29 | -6.78 | -2.86 | 1.20 | |
| CFS Aberdeen Australian Fixed Interest | 2.85 | 2.64 | -6.84 | -3.33 | 0.09 | |
| CFS Wholesale Australian Bond | 2.63 | 2.31 | -6.72 | -2.64 | 0.95 | |
| DDH Fixed Interest | 2.95 | 2.47 | -6.67 | -2.67 | 0.99 | |
| Spectrum Strategic Income | SPE01 | 0.42 | 1.11 | 1.20 | 1.20 | 2.40 |
| Jamieson Coote Bonds Active | 2.89 | 1.85 | -7.13 | -3.48 | 0.84 | |
| Legg Mason Western Asset Australian Bond Trust | LMA04 | 3.21 | 2.81 | -6.70 | -2.79 | 1.10 |
| Macquarie Australian Fixed Interest | 2.83 | 2.56 | -6.33 | -2.62 | 1.23 | |
| Mercer Australian Sovereign Bond Fund | 2.95 | 1.97 | -6.84 | -3.38 | 1.09 | |
| Nikko AM Australian Bond | 3.10 | 2.97 | -6.43 | -2.71 | 1.21 | |
| Henderson Australian Fixed Interest (Inst) | 3.18 | 3.25 | -7.44 | -2.33 | 1.16 | |
| Henderson Tactical Income | 0.69 | 2.35 | -0.82 | 1.01 | 1.74 | |
| Perpetual WFIA-Schroder Fixed Income | 3.06 | 2.77 | -7.49 | -2.96 | 0.46 | |
| Perpetual WFIA-Vanguard Aust Fixed Interest Index | 2.74 | 2.05 | -6.58 | -3.34 | 0.24 | |
| PIMCO Australian Bond (Wholesale) | PMF04 | 3.00 | 2.95 | -6.65 | -2.92 | 0.89 |
| PIMCO Australian Focus (Wholesale) | PMF05 | 1.87 | 2.40 | -3.33 | -1.30 | 1.06 |
| Realm High Income (Wholesale) | 2.09 | 4.90 | 2.08 | 2.89 | 3.21 | |
| Realm Strategic Income - Enduring Units | 0.73 | 2.06 | 5.92 | n/a | n/a | |
| SSgA Australian Fixed Income | 2.74 | 2.16 | -6.44 | -2.91 | 0.99 | |
| UBS Australian Bond Fund | 3.13 | 2.86 | -6.64 | -3.05 | 0.85 | |
| Vanguard Australian Fixed Interest Index | UAM04 | 2.78 | 2.18 | -6.41 | -2.94 | 0.94 |
| Vanguard Australian Govt Bond Index | 2.93 | 1.98 | -6.92 | -3.29 | 0.88 | |
| Bloomberg AusBond Composite 0+YR AUD | 2.76 | 2.20 | -6.26 | -2.72 | 1.15 |
*End of January 2023. Return in AUD after fees