Conditions facing global fund managers deteriorated again in September. Long-term US Treasury bond yields finished the month significantly higher, as did yields in the UK and in major euro-zone countries. The Aussie dollar was weaker against the USD, the euro, sterling and the yen. Only 2 out of 34 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 September was -3.68% (August: -2.14%) while the median return over the 12 months including September came to -13.42% (August: -11.30%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -3.88% over the month and -14.62% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield gained 66bps to 4.15% over the month, the 10-year yield added 58bps to 3.71% while the 30-year yield finished 42bps higher at 3.66%. BBB corporate spreads widened.
In other major bond markets, the German 10-year bund yield gained 58bps to 2.12% while the French 10-year OAT yield increased by 56bps to 2.72%. The 10-year UK gilt yield finished the month 143bps higher at 4.03%.
The best performing global fund for the month in the YieldReport September survey was the Ardea Real Outcome Fund. It produced a return of +1.83% for the month, following a top-quartile return of 0.63% in August and a near-worst-in-class performance of -2.08% in July.
The second-highest return for the month was produced by the T. Rowe Price Dynamic Global Bond Fund. Its return of 1.59% followed a best-in-class of 2.52% in August and a worst-in-class performance of -2.31% in July.
In terms of fund performance for the twelve months to the end of September, 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 5.52% while the Ardea Real Outcome Fund took over second place after it produced a 12-month return of 0.97%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -3.76 | -3.92 | -13.81 | -4.30 | -1.25 | |
| AMP Future Directions International Bond Fund | -4.31 | -6.66 | -18.82 | -6.36 | -2.33 | |
| AMP Capital International Bond | -4.17 | -4.12 | -14.98 | -4.56 | -1.01 | |
| ANZ-CFS Global Credit Income EF | -0.99 | 0.46 | -4.63 | -1.42 | -0.60 | |
| Ardea Real Outcome Fund | 1.83 | 0.34 | 0.97 | 2.27 | 3.76 | |
| Bentham Professional Global Income | mFund | -2.32 | -0.27 | -2.03 | 2.79 | 2.72 |
| Bentham Wholesale High Yield | mFund | -4.28 | -1.43 | -14.09 | -2.45 | 0.16 |
| Bentham Syndicated Loan ASX Class | mFund | -2.65 | 0.34 | -3.94 | 0.63 | 1.61 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.19 | -0.16 | -1.52 | 0.15 | 1.29 |
| BlackRock Wholesale International Bond | -2.27 | -2.60 | -12.63 | -3.18 | -0.09 | |
| CFS Wholesale Global Corporate Bond | -5.08 | -4.95 | -17.59 | -3.70 | -0.45 | |
| Dimensional Five-Year Diversified Fixed Interest | -1.21 | -1.20 | -8.94 | -2.76 | -0.66 | |
| Dimensional Global Bond Trust | -4.53 | -4.69 | -16.61 | -4.94 | -0.67 | |
| Dimensional Two-Year Diversified Fixed Interest | -0.84 | -0.75 | -4.70 | -1.17 | 0.06 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -2.56 | -2.27 | -13.45 | -4.18 | -0.32 | |
| Franklin Templeton Multisector Bond (Institutional) | -7.24 | -7.69 | -20.76 | -9.85 | -7.37 | |
| Invesco Wholesale Senior Secured Income | mFund | -2.59 | -0.03 | -4.62 | 1.39 | 2.11 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -5.42 | -5.01 | -13.06 | -2.55 | -0.89 |
| Legg Mason Western Asset Global Bond Fund | -4.49 | -4.93 | -15.92 | -3.83 | -0.79 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -7.22 | -2.05 | -25.63 | -17.60 | -13.87 | |
| Macquarie Global Income Opportunities Fund | -1.80 | -0.61 | -7.14 | -0.97 | 0.83 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -2.78 | -1.28 | -16.09 | -4.73 | 0.35 | |
| Mercer Global Credit Fund | -5.41 | -5.24 | -17.66 | -4.41 | -0.85 | |
| Mercer Global Sovereign Bond Fund | -2.10 | -2.38 | -9.79 | -3.01 | 0.96 | |
| PIMCO Global Bond (Wholesale) | mFund | -3.90 | -3.88 | -13.85 | -3.23 | -0.21 |
| PIMCO Global Credi (Wholesale) | mFund | -4.24 | -4.19 | -15.00 | -3.64 | -0.58 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -5.06 | -2.19 | -12.96 | -3.40 | 0.11 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -4.18 | -2.64 | -10.67 | -1.34 | -0.09 |
| State Street SSgA Global Fixed Income Trust | -3.49 | -4.44 | -13.40 | -4.31 | -0.44 | |
| T.Rowe Price Dynamic Global Bond Fund | 1.59 | 1.75 | 5.52 | 5.56 | 3.18 | |
| UBS Global Credit Fund | -5.18 | -5.00 | -18.65 | -4.30 | -0.72 | |
| UBS International Bond | -3.59 | -3.66 | -13.64 | -3.71 | -0.33 | |
| Vanguard International Credit Securities Index (Hedged) | -4.30 | -4.45 | -16.51 | -4.51 | -0.75 | |
| Vanguard International Fixed Interest Index (Hedged) | -3.19 | -3.95 | -12.45 | -4.21 | -0.41 |
*End of September 2022. Return in AUD after fees