Conditions remained torrid in February for global fund managers. US Treasury bond yields finished the month higher, especially at the short end, while long-term yields rose more than a little in the UK. Yields in the major euro-zone economies also rose noticeably. The Aussie dollar was stronger against the USD, euro, sterling and yen, exacerbating the effects of higher yields. 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 February was -1.37% (January: -1.44%) while the median return over the 12 months including February came to -2.41% (January: -2.74%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -1.46% over the month and -2.90% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield gained 25bps to 1.43% over the month while 10-year and 30-year yields each added 5bps to 1.83% and 2.16% respectively. BBB spreads again widened moderately.
In other major bond markets, the German 10-year bond yield gained 20bps to 0.17% and the French 10-year increased by 28bps to +0.65%. The 10-year UK gilt yield finished the month 20bps higher at 1.37%.
The best performing global fund for the month in the YieldReport February survey was the T. Rowe Price Dynamic Global Bond Fund. It produced a return of +0.64% for the month following a top-returning performance of +0.97% in January and a fourth-quartile return of -0.34% in December.
The second-highest return for a second consecutive month was produced by the Bentham Professional Global Income Fund. Its return of +0.07% followed January’s near best-in-class return of 0.67% in January and a top-quartile return of 0.70% in December.
In terms of fund performance for the twelve months to the end of February, the Invesco Wholesale Senior Secured Income Fund retained its title as the highest performing fund for a twelfth consecutive month. The Invesco fund produced a 12-month return of 4.93%, while the Bentham Professional Global Income Fund took over second place after it produced a 12-month return of 3.44%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -1.43 | -3.01 | -3.05 | 1.39 | 1.36 | |
| Alpha Diversified Income | mFund | n/a | n/a | n/a | n/a | n/a |
| AMP Future Directions International Bond Fund | -1.78 | -4.03 | -4.00 | 1.08 | 1.37 | |
| AMP Capital International Bond | -1.75 | -3.90 | -3.50 | 1.60 | 1.90 | |
| ANZ-CFS Global Credit Income EF | -0.83 | -1.27 | -1.70 | -0.23 | 0.18 | |
| Ardea Real Outcome Fund | -0.97 | -0.79 | -2.06 | 3.60 | 3.92 | |
| Bentham Professional Global Income | mFund | 0.07 | 1.44 | 3.44 | 4.15 | 4.22 |
| Bentham Wholesale High Yield | mFund | -1.12 | -1.74 | 0.66 | 3.41 | 3.71 |
| Bentham Syndicated Loan ASX Class | mFund | -0.33 | 0.56 | 3.36 | 2.75 | 3.28 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.12 | 0.03 | -0.01 | 1.35 | 1.90 |
| BlackRock Wholesale International Bond | -2.11 | -3.97 | -3.11 | 2.40 | 2.41 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | n/a | n/a | n/a | n/a | n/a | |
| CFS Wholesale Global Corporate Bond | -1.90 | -4.68 | -3.58 | 3.65 | 3.14 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.74 | -2.08 | -3.37 | 0.04 | 0.84 | |
| Dimensional Global Bond Trust | -1.36 | -3.77 | -2.77 | 2.35 | 2.56 | |
| Dimensional Two-Year Diversified Fixed Interest | -0.36 | -0.83 | -1.69 | 0.42 | 0.93 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -2.92 | -4.41 | -4.54 | 1.29 | 1.82 | |
| Franklin Templeton Multisector Bond (Institutional) | -1.38 | -0.02 | -4.50 | -6.36 | -2.95 | |
| Invesco Wholesale Senior Secured Income | mFund | -0.43 | 0.33 | 4.93 | 3.67 | 3.60 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -1.15 | -0.99 | -0.95 | 3.14 | 2.74 |
| Legg Mason Western Asset Global Bond Fund | -1.99 | -3.39 | -2.40 | 2.79 | 2.62 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -5.74 | -7.51 | -4.37 | 1.83 | 2.96 | |
| Macquarie Global Income Opportunities Fund | -1.08 | -1.06 | 0.11 | 2.24 | 2.54 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -2.04 | -3.51 | -1.30 | 2.33 | 3.37 | |
| Mercer Global Credit Fund | -2.13 | -4.57 | -3.36 | 2.76 | 2.65 | |
| Mercer Global Sovereign Bond Fund | -1.15 | -3.20 | -2.09 | 2.37 | 3.07 | |
| Omega Global Corporate Bond | n/a | n/a | n/a | n/a | n/a | |
| PIMCO Global Bond (Wholesale) | mFund | -1.52 | -2.90 | -2.47 | 2.61 | 2.79 |
| PIMCO Global Credi (Wholesale) | mFund | -1.76 | -3.38 | -2.43 | 2.42 | 2.59 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -1.49 | -2.47 | -2.03 | 2.03 | 2.64 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -1.14 | -1.52 | -2.56 | 1.72 | 2.21 |
| State Street SSgA Global Fixed Income Trust | -1.15 | -3.63 | -2.27 | 1.99 | 2.23 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.64 | 2.38 | 0.36 | 3.46 | 2.10 | |
| UBS Global Credit Fund | -2.41 | -5.07 | -3.72 | 3.29 | 3.05 | |
| UBS International Bond | -1.67 | -3.57 | -2.61 | 1.96 | 2.31 | |
| Vanguard International Credit Securities Index (Hedged) | -2.07 | -4.66 | -3.43 | 2.38 | 2.53 | |
| Vanguard International Fixed Interest Index (Hedged) | -1.08 | -3.44 | -2.28 | 1.60 | 2.01 |