Conditions continued to be favourable for fund managers in July. Longer-term US Treasury bond yields finished the month considerably lower, as did yields in the UK and major euro-zone economies. The Aussie dollar was weaker against the USD, the yen, euro and sterling. 31 out of 37 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 July was 0.96% (June: 0.52%) while the median return over the 12 months including July came to 1.55% (June: 1.90%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned 1.31% in July and -0.02% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield lost 7bps to 0.18% over the month, the 10-year yield shed 24bps to 1.23% and the 30-year yield dropped 20bps to 1.89%. BBB spreads widened modestly.
In other major bond markets, the German 10-year bund yield lost 25bps to -0.46%, the French 10-year OAT yield shed 23bps to -0.10% while the 10-year UK gilt yield finished the month 16bps lower at 0.56%.
The best performing global fund for the month in the YieldReport July survey was the Macquarie Core Australian Fixed Interest Plus Fund. It produced a return of +2.05% for the month following a top-quartile return of 1.17% in June and a near-median return of 0.23% in May.
The second-highest return was produced by the Dimensional Global Bond Trust. Its return of +1.63% followed a top-quartile returns of 1.06% in June and +0.44% in May.
In terms of fund performance for the twelve months to the end of July, the Invesco Wholesale Senior Secured Income retained its title as the highest performing fund for a fifth consecutive month. The Invesco fund produced a 12-month return of 12.64%, with the Bentham Professional Syndicated Loan switching rankings with its sibling fund from second place with a return of 10.80%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.96 | 1.50 | 0.38 | 3.30 | 1.99 | |
| Alpha Diversified Income | mFund | 0.58 | 1.49 | 0.92 | 2.09 | 1.78 |
| AMP Future Directions International Bond Fund | 1.09 | 1.81 | -1.18 | 3.56 | 2.13 | |
| AMP Capital International Bond | 1.13 | 1.94 | -0.65 | 4.10 | 2.66 | |
| ANZ-CFS Global Credit Income EF | -0.48 | 0.04 | 2.61 | 0.41 | 1.14 | |
| Ardea Real Outcome Fund | 0.00 | -0.41 | 1.85 | 5.34 | 4.98 | |
| Bentham Professional Global Income | mFund | -0.25 | -0.15 | 9.53 | 3.50 | 5.49 |
| Bentham Wholesale High Yield | mFund | 0.23 | 1.51 | 9.83 | 4.99 | 5.83 |
| Bentham Syndicated Loan ASX Class | mFund | 0.03 | 0.90 | 10.80 | 2.46 | 4.39 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.23 | 0.30 | 1.53 | 1.96 | 2.29 |
| BlackRock Wholesale International Bond | 1.09 | 1.80 | 1.30 | 4.90 | 3.21 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | 1.60 | 2.00 | -2.23 | 3.80 | 2.02 | |
| CFS Wholesale Global Corporate Bond | 1.24 | 2.93 | 0.66 | 6.51 | 4.51 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.77 | 0.79 | 1.10 | 2.21 | 1.68 | |
| Dimensional Global Bond Trust | 1.63 | 3.16 | 1.08 | 5.39 | 3.54 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.04 | 0.06 | 0.38 | 1.59 | 1.51 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 0.77 | 1.68 | 0.42 | 4.35 | 2.19 | |
| Franklin Templeton Multisector Bond (Institutional) | -1.30 | -1.49 | -0.73 | -4.28 | -0.36 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.00 | 1.56 | 12.64 | 3.34 | 4.28 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -1.14 | 0.69 | 5.10 | 4.08 | 3.52 |
| Legg Mason Western Asset Global Bond Fund | 0.78 | 1.94 | 1.99 | 5.07 | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 0.21 | 4.62 | 3.77 | 6.21 | n/a | |
| Macquarie Global Income Opportunities Fund | 0.54 | 1.11 | 3.14 | 3.46 | 3.37 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 2.05 | 3.48 | 1.98 | 6.20 | 4.30 | |
| Mercer Global Credit Fund | 1.13 | 2.66 | 1.82 | 5.71 | 3.79 | |
| Mercer Global Sovereign Bond Fund | 1.22 | 2.07 | -0.42 | 4.67 | 3.49 | |
| Omega Global Corporate Bond | 1.02 | 2.29 | -0.28 | 4.52 | 2.90 | |
| PIMCO Global Bond (Wholesale) | mFund | 1.06 | 1.52 | 2.67 | 4.71 | 3.76 |
| PIMCO Global Credi (Wholesale) | mFund | 1.00 | 1.99 | 2.86 | 4.88 | 3.58 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 1.38 | 2.03 | 1.82 | 4.66 | 3.51 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | 0.20 | 0.21 | 4.73 | 3.24 | 3.82 |
| State Street SSgA Global Fixed Income Trust | 1.50 | 2.17 | -1.15 | 4.29 | 2.53 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.43 | -1.71 | 2.53 | 3.26 | 2.22 | |
| UBS Global Credit Fund | 1.24 | 2.99 | 2.62 | 6.44 | 4.50 | |
| UBS International Bond | 1.20 | 2.07 | 0.63 | 4.43 | 2.96 | |
| Vanguard International Credit Securities Index (Hedged) | 1.35 | 2.72 | 1.55 | 5.28 | 3.66 | |
| Vanguard International Fixed Interest Index (Hedged) | 1.38 | 2.03 | -1.16 | 3.87 | 2.39 |