Conditions facing global fund managers in October improved on those of September but not by a great degree. Long-term US Treasury bond yields again finished the month noticeably higher, rising for a sixth consecutive month. Yields in major euro-zone countries remained reasonably stable, while UK yields increased modestly again. The Aussie dollar was weaker against all the major currencies. Seven of the 30 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 October was -0.91% (September: -1.60%) while the median return over the 12 months including October was 1.33% (September: 1.88%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.91% over the month and -0.27% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield added 5bps to 5.10% over the month, the 10-year yield gained 35bps to 4.93% while the 30-year yield finished 40bps higher at 5.10%. BBB corporate spreads widened moderately.
In other major bond markets, the German 10-year bund yield lost 5bps to 2.81% while the French 10-year OAT yield added 2bps to 3.43%. The 10-year UK gilt yield finished the month 9bps higher at 4.68%.
The best performing global fund for the month in the YieldReport October survey was the Ardea Real Outcome Fund. It produced a return of 0.71% for the month, following a top-quartile return of 0.19% in September and a top-quartile return of 0.46% in August.
The second-highest return for the month was produced by the T. Rowe Price Dynamic Global Bond Fund. Its return of 0.61% followed a best-in-class return of 0.59% in September and a third-quartile return of -0.51% in August.
In terms of fund performance for the twelve months to the end of October, Bentham’s Professional Syndicated Loan Fund switched places with its sibling Bentham Wholesale High Yield Fund to take the title as the highest performing fund. The Professional Syndicated Loan Fund produced a 12-month return of 9.49% while the Wholesale High Yield Fund returned 7.44%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -1.09 | -3.56 | -1.00 | -5.41 | -1.23 | |
| ANZ-CFS Global Credit Income EF | 0.02 | -0.12 | 4.93 | 1.07 | 0.45 | |
| Ardea Real Outcome Fund | 0.71 | 1.36 | 3.40 | 1.81 | 3.99 | |
| Bentham Professional Global Income | mFund | -1.41 | -1.13 | 1.53 | 2.46 | 2.01 |
| Bentham Wholesale High Yield | mFund | -1.44 | -2.13 | 7.44 | 0.87 | 1.96 |
| Bentham Syndicated Loan ASX Class | mFund | -0.07 | 1.65 | 9.49 | 4.75 | 2.63 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.53 | 1.40 | 4.98 | 1.41 | 1.69 |
| CFS Wholesale Global Corporate Bond | -1.10 | -3.75 | 2.22 | -5.61 | 0.17 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.25 | 0.92 | 3.53 | -1.84 | -0.07 | |
| Dimensional Global Bond Trust | -0.91 | -2.47 | 1.56 | -5.83 | -0.62 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.34 | 1.03 | 3.79 | -0.31 | 0.64 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -0.71 | -3.64 | 1.10 | -4.75 | 0.09 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.31 | 1.94 | 9.07 | 5.66 | 3.17 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -2.03 | -9.87 | -1.17 | -4.03 | -0.47 |
| Legg Mason Western Asset Global Bond Fund | -0.50 | -4.19 | -0.41 | -5.35 | -0.39 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -3.07 | -12.67 | -0.85 | -8.38 | -1.74 | |
| Macquarie Global Income Opportunities Fund | -0.64 | -1.09 | 3.13 | -0.57 | 1.25 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -2.35 | -4.37 | -1.96 | -5.94 | -0.35 | |
| Mercer Global Credit Fund | -1.20 | -4.09 | 1.27 | -5.71 | -0.54 | |
| Mercer Global Sovereign Bond Fund | -0.65 | -1.66 | -1.18 | -4.34 | 0.26 | |
| PIMCO Global Bond (Wholesale) | mFund | -0.99 | -2.82 | 1.02 | -4.43 | -0.19 |
| PIMCO Global Credi (Wholesale) | mFund | -1.21 | -3.68 | 1.34 | -4.82 | -0.54 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -1.51 | -2.81 | 0.26 | -4.57 | -0.25 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -0.96 | -1.84 | 1.32 | -2.32 | -0.17 |
| State Street SSgA Global Fixed Income Trust | -0.59 | -2.88 | -1.72 | -6.16 | -1.02 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.61 | 0.68 | -4.30 | 0.51 | 1.66 | |
| UBS Global Credit Fund | -1.26 | -4.10 | 1.88 | -5.86 | -0.35 | |
| UBS International Bond | -0.93 | -3.65 | -0.53 | -5.23 | -0.70 | |
| Vanguard International Credit Securities Index (Hedged) | -0.90 | -3.22 | 1.37 | -5.47 | -0.55 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.76 | -2.92 | -1.39 | -5.62 | -0.97 |
*End of October 2023. Return in AUD after fees