Conditions facing global fund managers in July were not as tricky as they were in June and funds general performed well. Long-term US Treasury bond yields finished the month modestly higher, rising for a third consecutive month. Yields in major euro-zone countries also increased modestly, while UK yields slipped a touch. The Aussie dollar was stronger against the USD and euro but weaker against sterling and the yen. 27 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 July was 0.47% (June: -0.28%) while the median return over the 12 months including July came to -2.04% (June: -1.83%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.06% over the month and -4.50% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield lost 4bps to 4.85% over the month, the 10-year yield added 12bps to 3.96% while the 30-year yield finished 15bps higher at 4.01%. BBB corporate spreads tightened again.
In other major bond markets, the German 10-year bund yield gained 13bps to 2.52% while the French 10-year OAT yield added 14bps to 3.06%. The 10-year UK gilt yield finished the month 1bp lower at 4.43%.
The best performing global fund for the month in the YieldReport July survey was the Western Asset Macro Opportunities Bond Fund. It produced a return of 2.93% for the month, following a top quartile return of 0.37% in June and a worst-in-class performance of -2.02% in May.
The second-highest return for the month was produced by the Bentham Wholesale High Yield Fund. Its return of 1.37% followed a top-three performance of 1.27% in June and a second-quartile return of -0.28% in May.
In terms of fund performance for the twelve months to the end of July, Bentham’s Professional Syndicated Loan Fund took over the title of highest performing fund from its sibling Wholesale High Yield Fund. The Professional Syndicated Loan Fund produced a 12-month return of 7.31% while the Invesco Wholesale Senior Secured Income Fund moved into second place with a 12-month return of 7.19%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.15 | -0.84 | -4.07 | -4.33 | -0.78 | |
| ANZ-CFS Global Credit Income EF | 1.09 | 2.02 | 5.08 | 1.23 | 0.47 | |
| Ardea Real Outcome Fund | 0.88 | 0.86 | 5.82 | 1.76 | 3.87 | |
| Bentham Professional Global Income | mFund | 1.03 | -2.79 | 0.26 | 3.74 | 2.48 |
| Bentham Wholesale High Yield | mFund | 1.37 | 2.36 | 5.39 | 2.13 | 2.34 |
| Bentham Syndicated Loan ASX Class | mFund | 0.27 | 0.83 | 7.31 | 5.26 | 2.51 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.63 | 1.00 | 3.52 | 1.14 | 1.55 |
| CFS Wholesale Global Corporate Bond | 0.59 | -0.42 | -3.00 | -4.74 | 0.74 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.47 | 0.32 | 0.12 | -2.07 | -0.17 | |
| Dimensional Global Bond Trust | 0.38 | -0.81 | -4.84 | -4.93 | -0.10 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.52 | 0.59 | 1.18 | -0.59 | 0.52 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 0.45 | -0.04 | 0.24 | -3.30 | 0.46 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.97 | 3.19 | 7.19 | 5.69 | 2.95 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 1.13 | 1.53 | -1.12 | -1.03 | 0.79 |
| Legg Mason Western Asset Global Bond Fund | 0.57 | -0.87 | -3.98 | -4.02 | 0.11 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 2.93 | 1.23 | 3.49 | -13.84 | -0.52 | |
| Macquarie Global Income Opportunities Fund | 0.84 | -0.23 | 2.17 | 0.11 | 1.50 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 0.87 | -3.39 | -2.14 | -4.23 | 0.62 | |
| Mercer Global Credit Fund | 0.40 | -0.74 | -3.71 | -4.55 | 0.17 | |
| Mercer Global Sovereign Bond Fund | 0.00 | -1.90 | -4.28 | -3.96 | 0.40 | |
| PIMCO Global Bond (Wholesale) | mFund | 0.34 | -0.27 | -2.84 | -3.19 | 0.29 |
| PIMCO Global Credi (Wholesale) | mFund | 0.22 | -0.38 | -3.16 | -3.51 | 0.15 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.47 | -1.32 | -1.94 | -3.32 | 0.35 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | 0.57 | 0.84 | -0.85 | -1.21 | 0.26 |
| State Street SSgA Global Fixed Income Trust | -0.44 | -1.33 | -5.99 | -5.33 | -0.54 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.51 | -4.60 | -3.61 | 0.15 | 1.52 | |
| UBS Global Credit Fund | 0.44 | -0.90 | -3.35 | -4.71 | 0.33 | |
| UBS International Bond | 0.05 | -1.06 | -3.59 | -4.10 | -0.04 | |
| Vanguard International Credit Securities Index (Hedged) | 0.35 | -0.64 | -3.42 | -4.51 | 0.01 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.40 | -1.22 | -4.76 | -4.80 | -0.44 |
*End of July 2023. Return in AUD after fees