Conditions facing global fund managers for Australian investors deteriorated markedly in December. Long-term US Treasury bond yields rose significantly, as did yields in major European countries. However, the Aussie dollar was considerably weaker against the US dollar and the euro and modestly weaker against yen and sterling. Only 11 of the 26 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 December was -0.58% (November: 1.18%) while the median return over the 12 months including December was 2.72% (November: 6.58%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -1.21% over the month and 1.45% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield added 9bps to 4.24% over the month, the 10-year yield gained 40bps to 4.57% while the 30-year yield finished 42bps higher at 4.78%. BBB corporate spreads tightened a touch again.
In other major bond markets, the German 10-year bund yield gained 27bps to 2.36% while the French 10-year OAT yield finished 29bps higher at 3.19%. The 10-year UK gilt yield finished the month 34bps higher at 4.67%.
The best performing global fund for the month in the YieldReport December survey was the T. Rowe Price Dynamic Global Bond Fund which produced a return of 0.95%. The second-highest return for the month, 0.93%, was produced by the Macquarie Core Australian Fixed Interest Plus Fund while the Invesco Wholesale Senior Secured Income Fund ranked third with a return of 0.78%.
In terms of fund performance for the twelve months to the end of December, the Invesco Wholesale Senior Secured Income Fund took the title of highest performing fund from Bentham Wholesale High Yield Fund. The Invesco fund produced a 12-month return of 6.73% while the Bentham Wholesale High Yield Fund and the Bentham Professional Global Income Fund shared second place with returns of 6.63%.
| FUND NAME | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.75 | -1.44 | 1.14 | -2.21 | -0.96 | |
| ANZ-CFS Global Credit Income EF | 0.34 | 0.81 | 4.63 | 2.84 | 1.50 | |
| Ardea Real Outcome Fund | 0.02 | 0.79 | 1.02 | 1.60 | 1.98 | |
| Bentham Professional Global Income | mFund | 0.41 | -0.47 | 4.95 | 4.05 | 4.41 |
| Bentham Wholesale High Yield | mFund | -0.24 | 0.29 | 6.63 | 2.52 | 2.72 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.52 | 1.54 | 6.63 | 3.88 | 2.60 |
| Dimensional Five-Year Diversified Fixed Interest | 0.38 | 1.10 | 4.45 | 0.41 | 0.17 | |
| Dimensional Global Bond Trust | -1.14 | -1.48 | 1.89 | -2.45 | -0.72 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.41 | 1.16 | 4.57 | 1.74 | 1.10 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -1.07 | -1.80 | 1.51 | -1.60 | -0.72 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.78 | 1.49 | 6.73 | 4.43 | 4.32 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -2.95 | -5.81 | -5.78 | -3.88 | -1.50 |
| Macquarie Global Income Opportunities Fund | -1.63 | -3.07 | -1.06 | -3.48 | -1.09 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 0.24 | 0.52 | 5.25 | 1.97 | 1.82 | |
| Mercer Global Credit Fund | 0.93 | -0.11 | 4.40 | -1.36 | -0.36 | |
| Mercer Global Sovereign Bond Fund | -1.27 | -1.75 | 2.51 | -2.69 | -0.59 | |
| PIMCO Global Bond (Wholesale) | mFund | -0.94 | -2.33 | -0.05 | -2.62 | -1.13 |
| PIMCO Global Credi (Wholesale) | mFund | -0.45 | -0.82 | 2.92 | -1.50 | 0.10 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -0.72 | -0.81 | 3.55 | -1.76 | -0.19 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | 0.14 | -0.35 | 3.32 | -1.01 | 0.01 |
| State Street SSgA Global Fixed Income Trust | -1.04 | -1.34 | 0.89 | -3.30 | -1.41 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.95 | 2.76 | 4.28 | 0.96 | 2.21 | |
| UBS Global Credit Fund | -1.38 | -2.12 | 2.40 | -2.92 | -0.58 | |
| UBS International Bond | -0.89 | -1.20 | 2.32 | -2.07 | -0.57 | |
| Vanguard International Credit Securities Index (Hedged) | -1.22 | -1.52 | 2.29 | -2.55 | -0.72 | |
| Vanguard International Fixed Interest Index (Hedged) | -1.21 | -1.69 | 0.66 | -2.83 | -1.30 |
*End of December 2024. Return in AUD after fees