Conditions improved for global fund managers in May but not by enough to provide much comfort. US Treasury bond yields finished the month lower but long-term yields increased in the UK and in major euro-zone countries. The Aussie dollar was stronger against the USD and sterling but weaker against the euro. Only 7 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 May was -0.27% (April: -2.71%) while the median return over the 12 months including May came to -7.84% (April: -7.30%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.28% over the month and -8.54% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield lost 16bps to 2.55% over the month, the 10-year yield shed 8bps to 2.85% while the 30-year yield finished 5bps higher at 3.05%. BBB corporate spreads widened a touch.
In other major bond markets, German and French 10-year bond yields each gained 17bps to 1.07% and 1.58% respectively. The 10-year UK gilt yield finished the month 15bps higher at 2.00%.
The best performing global fund for the month in the YieldReport May survey was the Franklin Templeton Multisector Bond (Institutional) Fund. It produced a return of +0.63% for the month, following a fourth-quartile performance of -4.05% in April and a near best-in-class return of 0.95% in March.
The second-highest return was produced by the Legg Mason Western Asset Macro Opportunities Bond Fund. Its return of 0.51% followed a fourth-quartile return of -3.92% in April and a worst-in-class return of -10.38% in March.
In terms of fund performance for the twelve months to the end of May, the Bentham Professional Global Income Fund took over the title as the highest performing fund from Invesco’s Wholesale Senior Secured Income Fund. The Bentham fund produced a 12-month return of 1.46%, while the T. Rowe Price Dynamic Global Bond Fund took second place after it produced a 12-month return of 0.89%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.27 | -5.15 | -8.18 | -1.22 | 0.02 | |
| AMP Future Directions International Bond Fund | -0.38 | -6.17 | -9.70 | -1.99 | -0.20 | |
| AMP Capital International Bond | -0.34 | -6.01 | -9.20 | -1.46 | 0.33 | |
| ANZ-CFS Global Credit Income EF | -0.11 | -0.99 | -2.94 | -0.62 | -0.08 | |
| Ardea Real Outcome Fund | -0.25 | 1.21 | -1.52 | 2.93 | 3.64 | |
| Bentham Professional Global Income | mFund | -1.17 | -0.61 | 1.46 | 3.99 | 3.75 |
| Bentham Wholesale High Yield | mFund | -0.11 | -4.29 | -5.22 | 1.39 | 2.30 |
| Bentham Syndicated Loan ASX Class | mFund | -2.21 | -2.35 | -0.71 | 1.62 | 2.40 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.21 | -0.82 | -0.91 | 0.60 | 1.55 |
| BlackRock Wholesale International Bond | -0.30 | -4.69 | -7.85 | -0.32 | 1.12 | |
| CFS Wholesale Global Corporate Bond | 0.04 | -6.48 | -10.05 | 0.31 | 1.40 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.19 | -3.71 | -7.22 | -1.72 | -0.15 | |
| Dimensional Global Bond Trust | -0.12 | -6.97 | -9.88 | -1.36 | 0.77 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.15 | -1.81 | -3.52 | -0.51 | 0.41 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 0.02 | -4.43 | -8.93 | -1.19 | 0.45 | |
| Franklin Templeton Multisector Bond (Institutional) | 0.63 | -2.53 | -8.85 | -6.21 | -3.69 | |
| Invesco Wholesale Senior Secured Income | mFund | -2.88 | -2.97 | -0.38 | 2.32 | 2.80 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -0.33 | -4.12 | -6.62 | 1.24 | 1.54 |
| Legg Mason Western Asset Global Bond Fund | 0.31 | -5.71 | -8.74 | 0.05 | 1.11 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 0.51 | -13.45 | -18.72 | -3.54 | -0.85 | |
| Macquarie Global Income Opportunities Fund | -0.33 | -2.90 | -3.59 | 0.64 | 1.61 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -1.22 | -7.75 | -10.67 | -2.03 | 1.11 | |
| Mercer Global Credit Fund | -0.08 | -6.06 | -9.65 | -0.46 | 1.02 | |
| Mercer Global Sovereign Bond Fund | -0.68 | -3.87 | -6.05 | 0.02 | 1.83 | |
| PIMCO Global Bond (Wholesale) | mFund | -0.50 | -5.40 | -8.00 | -0.24 | 1.33 |
| PIMCO Global Credi (Wholesale) | mFund | -0.16 | -5.75 | -8.65 | -0.53 | 0.97 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -0.76 | -5.87 | -8.67 | -1.08 | 1.01 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -0.08 | -3.34 | -6.35 | 0.17 | 1.22 |
| State Street SSgA Global Fixed Income Trust | -0.76 | -5.81 | -7.83 | -1.11 | 0.78 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.86 | 2.12 | 0.89 | 3.42 | 2.66 | |
| UBS Global Credit Fund | -0.28 | -6.76 | -10.82 | -0.25 | 1.22 | |
| UBS International Bond | -0.59 | -5.01 | -7.94 | -0.73 | 0.97 | |
| Vanguard International Credit Securities Index (Hedged) | -0.18 | -6.19 | -9.78 | -0.93 | 0.87 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.88 | -5.34 | -7.48 | -1.26 | 0.68 |