Conditions facing global fund managers remained favourable in January despite a stronger Aussie dollar. Long-term US Treasury bond yields finished the month noticeably lower, while yields in the UK and major euro-zone countries also fell. The Aussie dollar was stronger against the USD, sterling, the euro and the yen. 29 out of 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 January was 2.31% (December: 1.15%) while the median return over the 12 months including January came to -8.14% (December: -11.46%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned 2.38% over the month and -10.29% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield lost 21bps to 4.21% over the month, the 10-year yield shed 37bps to 3.51% while the 30-year yield finished 33bps lower at 3.64%. BBB corporate spreads tightened.
In other major bond markets, the German 10-year bund yield lost 22bps to 2.26% while the French 10-year OAT yield shed 29bps to 2.73%. The 10-year UK gilt yield finished the month 33bps lower at 3.33%.
The best performing global fund for the month in the YieldReport January survey was the Western Asset Macro Opportunities Bond Fund. It produced a return of +7.09% for the month, following a fourth-quartile return of -0.80% in December and a best-in-class performance of +6.99% in November.
The second-highest return for the month was produced by the Bentham Professional Global Income Fund. Its return of 4.09% followed second-quartile performances of 1.55% in December and 2.98% in November.
In terms of fund performance for the twelve months to the end of January, the Bentham Professional Global Income Fund took over the title from the T. Rowe Price Dynamic Global Bond Fund as the highest performing fund in January. The Bentham fund produced a 12-month return of 2.67% while the T. Rowe Price fund produced a 12-month return of 1.32%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | s | 3.70 | -9.06 | -3.44 | -0.63 | |
| AMP Future Directions International Bond Fund | n/a | 0.23 | -17.25 | -6.77 | -2.38 | |
| AMP Capital International Bond | 2.46 | 4.28 | -9.92 | -3.75 | -0.30 | |
| ANZ-CFS Global Credit Income EF | 1.04 | 2.52 | -0.19 | -0.53 | -0.15 | |
| Ardea Real Outcome Fund | -1.54 | -2.92 | -0.35 | 1.27 | 3.01 | |
| Bentham Professional Global Income | mFund | 4.09 | 5.71 | 2.67 | 4.39 | 3.16 |
| Bentham Wholesale High Yield | mFund | 3.29 | 5.33 | -5.98 | -0.79 | 1.42 |
| Bentham Syndicated Loan ASX Class | mFund | 2.21 | 3.14 | -1.02 | 1.30 | 1.95 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.45 | 1.26 | -0.13 | 0.23 | 1.28 |
| CFS Wholesale Global Corporate Bond | 2.84 | 6.53 | -10.01 | -2.72 | 0.57 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.85 | 1.46 | -4.77 | -2.26 | -0.21 | |
| Dimensional Global Bond Trust | 2.70 | 4.48 | -10.80 | -4.03 | 0.21 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.63 | 1.34 | -2.06 | -0.80 | 0.37 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 2.20 | 4.26 | -7.57 | -3.46 | 0.47 | |
| Invesco Wholesale Senior Secured Income | mFund | 2.03 | 2.87 | -1.69 | 2.13 | 2.52 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 3.87 | 8.58 | -7.66 | -1.17 | 0.16 |
| Legg Mason Western Asset Global Bond Fund | 2.69 | 4.61 | -10.50 | -3.05 | 0.03 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 7.09 | 13.66 | -13.93 | -4.64 | -1.15 | |
| Macquarie Global Income Opportunities Fund | 2.00 | 3.94 | -2.45 | -0.16 | 1.42 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 4.01 | 4.41 | -8.37 | -3.38 | 1.15 | |
| Mercer Global Credit Fund | 3.20 | 6.76 | -10.21 | -3.20 | 0.21 | |
| Mercer Global Sovereign Bond Fund | 0.88 | 1.42 | -7.53 | -2.95 | 1.02 | |
| PIMCO Global Bond (Wholesale) | mFund | 2.59 | 4.19 | -9.12 | -2.49 | 0.47 |
| PIMCO Global Credi (Wholesale) | mFund | 2.99 | 5.89 | -9.51 | -2.92 | 0.29 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 2.78 | 3.56 | -7.91 | -2.70 | 0.67 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | 1.44 | 2.44 | -6.89 | -1.07 | 0.26 |
| State Street SSgA Global Fixed Income Trust | 1.54 | 1.62 | -11.15 | -4.11 | -0.23 | |
| T.Rowe Price Dynamic Global Bond Fund | -1.60 | -1.79 | 1.32 | 4.05 | 2.18 | |
| UBS Global Credit Fund | 3.28 | 7.36 | -10.93 | -3.35 | 0.35 | |
| UBS International Bond | 2.31 | 3.99 | -8.88 | -3.10 | 0.23 | |
| Vanguard International Credit Securities Index (Hedged) | 2.88 | 5.25 | -10.40 | -3.70 | 0.08 | |
| Vanguard International Fixed Interest Index (Hedged) | 1.97 | 1.75 | -9.87 | -3.86 | -0.17 |
*End of January 2023. Return in AUD after fees