Conditions facing global fund managers turned positive in December, although it was not without its challenges. Long-term US Treasury bond yields finished the month moderately lower, while yields in the UK and major euro-zone countries rose noticeably. The Aussie dollar was stronger against the USD and sterling but weaker against the euro and the yen. 25 out of 32 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 December was 1.15% (November: 2.34%) while the median return over the 12 months including December came to -11.46% (November: -11.23%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -1.52% over the month and -14.00% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield lost 4bps to 4.42% over the month, the 10-year yield shed 16bps to 3.88% while the 30-year yield finished 17bps lower at 3.97%. BBB corporate spreads tightened modestly.
In other major bond markets, the German 10-year bund yield gained 36bps to 2.48% while the French 10-year OAT yield added 38bps to 3.02%. The 10-year UK gilt yield finished the month 19bps higher at 3.66%.
The best performing global fund for the month in the YieldReport December survey was the Legg Mason Brandywine Global Opportunistic Fixed Income Fund. It produced a return of +4.54% for the month, following a near best-in-class return of 5.17% in November and a fourth-quartile performance of -1.95% in October.
The second-highest return for the month was produced by the UBS Global Credit Fund. Its return of 3.95% followed a top-three performance of -1.15% in November and a fourth-quartile performance of -3.12% in October.
In terms of fund performance for the twelve months to the end of December, the T. Rowe Price Dynamic Global Bond Fund retained its title as the highest performing fund. The T. Rowe Price fund produced a 12-month return of 4.37% while the Ardea Real Outcome Fund again retained second place after it produced a 12-month return of 1.28%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 1.46 | -2.56 | -11.54 | -3.57 | -1.09 | |
| AMP Future Directions International Bond Fund | 0.23 | -4.69 | -17.79 | -6.15 | -2.45 | |
| AMP Capital International Bond | 1.78 | -3.01 | -12.99 | -3.93 | -0.86 | |
| ANZ-CFS Global Credit Income EF | 1.47 | 1.34 | -1.51 | -0.73 | -0.21 | |
| Ardea Real Outcome Fund | -1.41 | 1.63 | 1.28 | 1.97 | 3.48 | |
| Bentham Professional Global Income | mFund | 1.55 | -0.35 | -0.01 | 3.23 | 2.73 |
| Bentham Wholesale High Yield | mFund | 1.97 | -0.26 | -8.83 | -1.27 | 0.88 |
| Bentham Syndicated Loan ASX Class | mFund | 0.37 | 1.78 | -2.97 | 0.71 | 1.71 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.81 | 0.56 | -0.40 | 0.30 | 1.27 |
| CFS Wholesale Global Corporate Bond | 3.58 | -2.08 | -13.89 | -2.78 | 0.05 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.60 | -0.29 | -6.33 | -2.35 | -0.50 | |
| Dimensional Global Bond Trust | 1.73 | -3.05 | -14.17 | -4.19 | -0.51 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.71 | 0.01 | -2.90 | -0.91 | 0.22 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 2.01 | -0.77 | -10.14 | -3.38 | -0.09 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.83 | -0.69 | -2.68 | 2.12 | 2.33 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 4.54 | -3.05 | -10.14 | -1.76 | -0.09 |
| Legg Mason Western Asset Global Bond Fund | -1.36 | 1.86 | -14.27 | -3.36 | -0.54 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -0.80 | 3.87 | -22.74 | -6.89 | -2.41 | |
| Macquarie Global Income Opportunities Fund | 1.91 | 0.38 | -4.01 | -0.39 | 1.09 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 0.39 | -1.09 | -12.25 | -4.14 | 0.21 | |
| Mercer Global Credit Fund | 3.45 | -2.78 | -14.06 | -3.51 | -0.42 | |
| Mercer Global Sovereign Bond Fund | 0.54 | -2.20 | -9.48 | -2.62 | 0.71 | |
| PIMCO Global Bond (Wholesale) | mFund | 1.55 | -2.72 | -11.73 | -2.62 | -0.08 |
| PIMCO Global Credi (Wholesale) | mFund | 2.81 | -2.82 | -12.60 | -3.18 | -0.38 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -1.43 | 0.88 | -11.39 | -2.95 | 0.06 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -0.14 | 1.11 | -8.91 | -1.57 | 0.04 |
| State Street SSgA Global Fixed Income Trust | 0.09 | -3.90 | -13.62 | -3.98 | -0.66 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.20 | -1.28 | 4.37 | 4.61 | 2.56 | |
| UBS Global Credit Fund | 3.95 | -2.57 | -14.95 | -3.54 | -0.28 | |
| UBS International Bond | 1.64 | -2.57 | -11.73 | -3.20 | -0.30 | |
| Vanguard International Credit Securities Index (Hedged) | 2.30 | -2.62 | -14.10 | -3.87 | -0.53 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.22 | -3.66 | -12.71 | -3.93 | -0.65 |
*End of December 2022. Return in AUD after fees