Conditions facing global fund managers in September deteriorated. Long-term US Treasury bond yields finished the month noticeably higher, rising for a fifth consecutive month. Yields in major euro-zone countries also rose significantly, while UK yields increased modestly again. The Aussie dollar was weaker against the US dollar but stronger against other 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 September was -1.60% (August: -0.30%) while the median return over the 12 months including September was 1.88% (August: 0.14%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -2.06% over the month and 0.09% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield added 18bps to 5.05% over the month, the 10-year yield gained 47bps to 4.58% while the 30-year yield finished 49bps higher at 4.70%. BBB corporate spreads widened a touch.
In other major bond markets, the German 10-year bund yield gained 35bps to 2.86% while the French 10-year OAT yield increased by 39bps to 3.41%. The 10-year UK gilt yield finished the month 8bps higher at 4.59%.
The best performing global fund for the month in the YieldReport September survey was the T. Rowe Price Dynamic Global Bond Fund. It produced a return of 0.59% for the month, following a third-quartile return of -0.51% in August and a fourth-quartile return of -0.51% in July.
The second-highest return for the month was again produced by the Invesco Wholesale Senior Secured Income Fund. Its return of 0.54% followed a near-best-in-class return of 1.07% in August and a top-quartile return of 0.97% in July.
In terms of fund performance for the twelve months to the end of September, Bentham’s Wholesale High Yield Fund retained the title as the highest performing fund. The Wholesale High Yield Fund produced a 12-month return of 11.40% while the Professional Syndicated Loan Fund stayed in second place with a 12-month return of 10.52%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -1.91 | -2.35 | -0.12 | -5.05 | -1.16 | |
| ANZ-CFS Global Credit Income EF | -0.01 | 0.95 | 5.82 | 1.17 | 0.38 | |
| Ardea Real Outcome Fund | 0.19 | 1.54 | 3.94 | 1.76 | 3.98 | |
| Bentham Professional Global Income | mFund | -0.48 | 1.32 | 3.45 | 3.25 | 2.31 |
| Bentham Wholesale High Yield | mFund | -0.90 | 0.65 | 11.40 | 1.50 | 1.95 |
| Bentham Syndicated Loan ASX Class | mFund | 0.44 | 3.11 | 10.52 | 4.99 | 2.60 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.29 | 1.50 | 4.36 | 1.33 | 1.64 |
| CFS Wholesale Global Corporate Bond | -2.07 | -2.10 | 2.93 | -5.21 | 0.18 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.20 | 1.14 | 3.62 | -1.88 | -0.08 | |
| Dimensional Global Bond Trust | -1.69 | -1.20 | 2.31 | -5.48 | -0.42 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.26 | 1.21 | 3.59 | -0.40 | 0.59 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -2.57 | -2.52 | 1.65 | -4.30 | -0.13 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.54 | 2.60 | 9.95 | 5.50 | 3.06 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -4.55 | -6.96 | -1.08 | -3.09 | -0.61 |
| Legg Mason Western Asset Global Bond Fund | -3.01 | -3.15 | 0.08 | -5.10 | -0.57 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -7.59 | -7.26 | 0.11 | -7.82 | -1.57 | |
| Macquarie Global Income Opportunities Fund | -0.72 | 0.39 | 4.12 | -0.15 | 1.34 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -2.57 | -1.21 | 1.75 | -5.02 | 0.14 | |
| Mercer Global Credit Fund | -2.20 | -2.54 | 1.83 | -5.30 | -0.42 | |
| Mercer Global Sovereign Bond Fund | -0.67 | -1.02 | -1.17 | -4.17 | 0.25 | |
| PIMCO Global Bond (Wholesale) | mFund | -1.51 | -1.50 | 1.70 | -4.03 | -0.06 |
| PIMCO Global Credi (Wholesale) | mFund | -2.01 | -2.29 | 1.26 | -4.39 | -0.39 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -1.50 | -0.86 | 1.92 | -3.98 | 0.06 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -1.01 | -0.32 | 2.44 | -1.88 | 0.06 |
| State Street SSgA Global Fixed Income Trust | -2.03 | -2.73 | -1.64 | -5.98 | -0.92 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.59 | -0.44 | -7.39 | 0.43 | 1.61 | |
| UBS Global Credit Fund | -2.19 | -2.46 | 1.99 | -5.46 | -0.30 | |
| UBS International Bond | -2.11 | -2.70 | -0.19 | -4.92 | -0.59 | |
| Vanguard International Credit Securities Index (Hedged) | -1.97 | -2.00 | 1.75 | -5.06 | -0.49 | |
| Vanguard International Fixed Interest Index (Hedged) | -1.83 | -2.57 | -0.90 | -5.41 | -0.80 |
*End of September 2023. Return in AUD after fees