Conditions facing global fund managers in August reverted back to the trying times of June. Long-term US Treasury bond yields again finished the month modestly higher, rising for a fourth consecutive month. Yields in major euro-zone countries declined a little, while UK yields increased modestly. The Aussie dollar was weaker against all the major currencies. 13 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 August was -0.30% (July: 0.47%) while the median return over the 12 months including August came to 0.14% (July: -2.04%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.37% over the month and -1.77% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield added 2bps to 4.87% over the month, the 10-year yield gained 15bps to 4.11% while the 30-year yield finished 20bps higher at 4.21%. BBB corporate spreads widened modestly.
In other major bond markets, the German 10-year bund yield slipped 1bp to 2.51% while the French 10-year OAT yield lost 4bps to 3.02%. The 10-year UK gilt yield finished the month 8bps higher at 4.51%.
The best performing global fund for the month in the YieldReport August survey was the Bentham Professional Syndicated Loan Fund. It produced a return of 1.27% for the month, following a near-best-in-class return of 0.27% in July and a best-in-class performance of 1.81% in June.
The second-highest return for the month was produced by the Invesco Wholesale Senior Secured Income Fund. Its return of 1.07% followed a top-quartile performance of 0.97% in July and a near-best-in-class return of 1.63% in June.
In terms of fund performance for the twelve months to the end of August, Bentham’s Wholesale High Yield Fund took back the title of highest performing fund from its sibling Professional Syndicated Loan Fund. The Wholesale High Yield Fund produced a 12-month return of 7.59% while the Professional Syndicated Loan Fund slipped back to second place with a 12-month return of 7.11%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.60 | -0.61 | -2.00 | -4.36 | -0.83 | |
| ANZ-CFS Global Credit Income EF | -0.12 | 1.80 | 4.79 | 1.08 | 0.43 | |
| Ardea Real Outcome Fund | 0.46 | 1.49 | 5.64 | 1.89 | 3.99 | |
| Bentham Professional Global Income | mFund | 0.77 | -0.34 | 1.53 | 3.56 | 2.59 |
| Bentham Wholesale High Yield | mFund | 0.20 | 2.86 | 7.59 | 1.68 | 2.24 |
| Bentham Syndicated Loan ASX Class | mFund | 1.27 | 4.51 | 7.11 | 4.97 | 2.69 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.58 | 1.31 | 3.87 | 1.30 | 1.60 |
| CFS Wholesale Global Corporate Bond | -0.62 | 0.17 | -0.23 | -4.67 | 0.54 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.47 | 0.79 | 2.16 | -1.93 | -0.16 | |
| Dimensional Global Bond Trust | 0.12 | -0.04 | -0.64 | -4.76 | -0.21 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.43 | 0.96 | 2.46 | -0.47 | 0.54 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -0.40 | 0.14 | 1.66 | -3.21 | 0.44 | |
| Invesco Wholesale Senior Secured Income | mFund | 1.07 | 3.71 | 6.52 | 5.56 | 3.10 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -3.62 | -1.68 | -1.98 | -1.84 | 0.63 |
| Legg Mason Western Asset Global Bond Fund | -0.71 | -0.44 | -1.44 | -4.08 | 0.03 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -2.50 | 0.73 | 0.51 | -5.78 | 0.12 | |
| Macquarie Global Income Opportunities Fund | 0.27 | 0.59 | 2.99 | 0.19 | 1.50 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 0.51 | -1.26 | 1.53 | -3.89 | 0.54 | |
| Mercer Global Credit Fund | -0.75 | -0.64 | -1.51 | -4.63 | -0.05 | |
| Mercer Global Sovereign Bond Fund | -0.36 | -1.51 | -2.60 | -3.96 | 0.48 | |
| PIMCO Global Bond (Wholesale) | mFund | -0.33 | 0.03 | -0.76 | -3.39 | 0.20 |
| PIMCO Global Credi (Wholesale) | mFund | -0.50 | -0.31 | -1.05 | -3.69 | -0.06 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.18 | -0.25 | 0.67 | -3.25 | 0.30 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | 0.13 | 0.94 | 1.04 | -1.52 | 0.30 |
| State Street SSgA Global Fixed Income Trust | -0.27 | -1.09 | -3.11 | -5.10 | -0.60 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.51 | -3.36 | -6.46 | -0.01 | 1.64 | |
| UBS Global Credit Fund | -0.71 | -0.59 | -1.13 | -4.75 | 0.11 | |
| UBS International Bond | -0.65 | -0.98 | -1.69 | -4.15 | -0.23 | |
| Vanguard International Credit Securities Index (Hedged) | -0.39 | -0.13 | -0.67 | -4.41 | -0.16 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.35 | -1.00 | -2.27 | -4.60 | -0.53 |
*End of August 2023. Return in AUD after fees