Conditions were tough for global fund managers in October, just as they were in September. Longer-term US Treasury bond yields finished the month modestly higher, as did yields in the UK and major euro-zone economies. The Aussie dollar was stronger against the USD, euro, sterling and yen. Only 2 out of 36 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 October was -0.47% (September: -0.97%) while the median return over the 12 months including October came to +0.05% (September: 0.40%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.30% in October and -1.31% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield gained 22bps to 0.50% over the month, the 10-year yield added 7bps to 1.56% while the 30-year yield lost 11bps to 1.93%. BBB spreads finished a touch higher.
In other major bond markets, the German 10-year bond yield added 12bps to -0.10% and the French 10-year gained 13bps to +0.26%. The 10-year UK gilt yield finished the month 6bps higher at 0.97%.
The best performing global fund for the month in the YieldReport October survey was the Bentham Professional Global Income. It produced a return of +0.15% for the month following a “top-three” return of 0.52% in September and a top-quartile return of 0.36% in August.
The second-highest return was produced by the Invesco Wholesale Senior Secured Income Fund. Its return of +0.12% followed a best-in-class return of +0.80% in September and a “top-three” return of +0.75% in August.
In terms of fund performance for the twelve months to the end of October, the Invesco Wholesale Senior Secured Income Fund retained its title as the highest performing fund for an eighth consecutive month. The Invesco fund produced a 12-month return of 12.28%, with the Bentham Professional Syndicated Loan Fund next after it produced a 12-month return of 8.24%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.48 | -1.66 | -1.07 | 3.18 | 1.80 | |
| Alpha Diversified Income | mFund | n/a | -0.22 | 0.06 | 1.80 | 1.70 |
| AMP Future Directions International Bond Fund | -0.59 | -1.93 | -2.49 | 3.09 | 1.89 | |
| AMP Capital International Bond | -0.56 | -1.80 | -1.97 | 3.62 | 2.41 | |
| ANZ-CFS Global Credit Income EF | -0.08 | -0.05 | 2.20 | 0.40 | 0.90 | |
| Ardea Real Outcome Fund | -0.69 | -1.45 | -0.82 | 4.56 | 4.45 | |
| Bentham Professional Global Income | mFund | 0.15 | 1.04 | 7.82 | 3.45 | 4.97 |
| Bentham Wholesale High Yield | mFund | -0.60 | 0.04 | 8.17 | 5.11 | 5.15 |
| Bentham Syndicated Loan ASX Class | mFund | -0.09 | 0.75 | 8.24 | 2.36 | 3.92 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.16 | -0.14 | 0.76 | 1.66 | 2.10 |
| BlackRock Wholesale International Bond | -0.35 | -1.54 | -0.27 | 4.61 | 3.01 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | -1.05 | -2.45 | -3.96 | 3.25 | 1.85 | |
| CFS Wholesale Global Corporate Bond | -0.04 | -1.52 | 0.20 | 6.32 | 4.26 | |
| Dimensional Five-Year Diversified Fixed Interest | -1.85 | -2.73 | -1.86 | 1.12 | 1.15 | |
| Dimensional Global Bond Trust | -1.06 | -2.97 | -2.27 | 4.29 | 3.12 | |
| Dimensional Two-Year Diversified Fixed Interest | -0.99 | -1.18 | -0.98 | 1.05 | 1.18 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -0.85 | -1.51 | -1.93 | 4.46 | 2.22 | |
| Franklin Templeton Multisector Bond (Institutional) | -0.10 | -1.60 | -2.50 | -4.38 | -1.54 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.12 | 1.68 | 12.28 | 3.61 | 4.11 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -0.26 | -1.58 | 4.64 | 4.96 | 3.07 |
| Legg Mason Western Asset Global Bond Fund | -0.02 | -0.80 | 1.27 | 5.40 | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -0.39 | 0.09 | 6.16 | 8.14 | 5.22 | |
| Macquarie Global Income Opportunities Fund | -1.03 | -0.88 | 1.26 | 3.12 | 2.94 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -3.60 | -4.76 | -3.78 | 4.34 | 3.48 | |
| Mercer Global Credit Fund | -0.20 | -1.33 | 0.99 | 5.44 | 3.61 | |
| Mercer Global Sovereign Bond Fund | -0.40 | -1.63 | -1.57 | 4.45 | 3.33 | |
| Omega Global Corporate Bond | -3.29 | -5.00 | -4.32 | 2.93 | 1.90 | |
| PIMCO Global Bond (Wholesale) | mFund | -0.57 | -1.55 | 0.05 | 4.33 | 3.41 |
| PIMCO Global Credi (Wholesale) | mFund | -0.39 | -1.45 | 1.01 | 4.47 | 3.29 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -2.06 | -3.29 | -2.57 | 3.45 | 2.90 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -0.94 | -1.24 | 1.85 | 2.71 | 3.07 |
| State Street SSgA Global Fixed Income Trust | -0.14 | -1.70 | -2.54 | 3.85 | 2.50 | |
| T.Rowe Price Dynamic Global Bond Fund | -1.33 | -1.01 | 1.91 | 2.91 | 1.86 | |
| UBS Global Credit Fund | -0.46 | -1.77 | 1.36 | 6.09 | 4.17 | |
| UBS International Bond | -0.50 | -1.61 | -0.81 | 4.00 | 2.78 | |
| Vanguard International Credit Securities Index (Hedged) | -0.20 | -1.64 | 0.12 | 4.86 | 3.40 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.18 | -1.77 | -2.54 | 3.36 | 2.28 |