Conditions facing global fund managers in June were not as trying as they were in May but they were still tricky. Long-term US Treasury bond yields finished the month moderately higher for a second consecutive month. Yields in major euro-zone countries increased modestly, as did UK yields. The Aussie dollar was stronger against all major currencies. 13 of the 31 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 June was -0.28% (May: -0.68%) while the median return over the 12 months including June came to -1.83% (May: -3.37%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.28% over the month and -1.83% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield gained 48bps to 4.89% over the month, the 10-year yield added 19bps to 3.84% while the 30-year yield finished unchanged at 3.86%. BBB corporate spreads tightened.
In other major bond markets, the German 10-year bund yield gained 12bps to 2.39% while the French 10-year OAT yield added 8bps to 2.92%. The 10-year UK gilt yield finished the month 13bps higher at 4.44%.
The best performing global fund for the month in the YieldReport June survey was the Bentham Professional Syndicated Loan fund. It produced a return of 1.81% for the month, following a top quartile return of -0.14% in May and a near best-in-class performance of 1.43% in April.
The second-highest return for the month was produced by the Invesco Wholesale Senior Secured Income Fund. Its return of 1.63% followed a best-in-class performance of 0.56% in May and a top-quartile return of 0.80% in April.
In terms of fund performance for the twelve months to the end of June, the Bentham Wholesale High Yield Fund took over the title of highest performing fund from the Ardea Real Outcome Fund. The Bentham fund produced a 12-month return of 9.09% while Bentham Professional Syndicated Loan Fund moved in second place with a 12-month return of 7.55%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.16 | -0.88 | -1.72 | -3.93 | -1.40 | |
| ANZ-CFS Global Credit Income EF | 0.82 | 1.36 | 5.31 | 1.01 | 0.30 | |
| Ardea Real Outcome Fund | 0.15 | -0.48 | 2.72 | 1.86 | 3.71 | |
| Bentham Professional Global Income | mFund | -2.11 | -2.91 | 1.83 | 3.92 | 2.36 |
| Bentham Wholesale High Yield | mFund | 1.27 | 2.18 | 9.09 | 2.88 | 2.19 |
| Bentham Syndicated Loan ASX Class | mFund | 1.81 | 3.12 | 7.55 | 5.33 | 2.33 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.10 | 0.76 | 2.66 | 1.13 | 1.47 |
| CFS Wholesale Global Corporate Bond | 0.20 | -0.32 | -0.06 | -4.15 | 0.74 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.15 | 0.11 | 1.22 | -2.17 | -0.25 | |
| Dimensional Global Bond Trust | -0.54 | -0.67 | -1.30 | -4.61 | -0.17 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.01 | 0.34 | 1.59 | -0.73 | 0.44 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 0.09 | 0.08 | 1.91 | -3.01 | 0.61 | |
| Invesco Wholesale Senior Secured Income | mFund | 1.63 | 3.02 | 7.13 | 6.00 | 2.92 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 0.87 | 0.32 | 0.99 | -0.29 | 0.87 |
| Legg Mason Western Asset Global Bond Fund | -0.30 | -1.36 | -1.76 | -10.50 | 0.18 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 0.37 | -0.12 | 5.73 | -12.59 | -1.82 | |
| Macquarie Global Income Opportunities Fund | -0.53 | -0.65 | 3.08 | 0.24 | 1.43 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -2.62 | -4.12 | 1.68 | -4.13 | 0.52 | |
| Mercer Global Credit Fund | -0.30 | -0.51 | -0.99 | -3.86 | 0.17 | |
| Mercer Global Sovereign Bond Fund | -1.16 | -2.10 | -2.53 | -3.48 | 0.44 | |
| PIMCO Global Bond (Wholesale) | mFund | 0.02 | -0.18 | -0.75 | -2.79 | 0.27 |
| PIMCO Global Credi (Wholesale) | mFund | -0.02 | -0.17 | -0.71 | -3.06 | 0.17 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -0.89 | -1.40 | 0.55 | -3.09 | 0.30 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | 0.24 | 0.62 | 0.06 | -1.10 | 0.26 |
| State Street SSgA Global Fixed Income Trust | -0.38 | -0.71 | -3.37 | -4.90 | -0.51 | |
| T.Rowe Price Dynamic Global Bond Fund | -2.36 | -4.29 | -5.35 | 0.79 | 1.72 | |
| UBS Global Credit Fund | -0.31 | -0.71 | -0.67 | -4.07 | 0.42 | |
| UBS International Bond | -0.38 | -0.74 | -1.17 | -3.75 | -0.04 | |
| Vanguard International Credit Securities Index (Hedged) | -0.10 | -0.42 | -0.79 | -3.98 | 0.02 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.26 | -0.65 | -2.30 | -4.42 | -0.38 |
*End of June 2023. Return in AUD after fees