Conditions in April returned to the glory days of January for Australian investors in global bonds despite unfavourable exchange rate movements. US Treasury bond yields moved a little lower while UK gilt yields fell moderately. Sovereign bond yields in some major euro-zone markets also fell. However, the Aussie dollar was several percent stronger against the US dollar and the euro but it was considerably weaker against the yen.
Unlike March, the overwhelming majority of funds in the survey finished the month in the black. Only 2 of the 39 funds in the YieldReport survey finished the month with a negative return. Of the 37 funds which produced positive returns, just over one quarter of them produced a return of +3.00% or more.
The median 1 month performance in the YieldReport survey of global bond funds in April was +2.09% (March: -4.29%) while the median return over the 12 months including April came to +3.97% (March: +1.55%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned +1.60% in April and +7.44% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield fell by 5bps to 0.19%, the 10-year yield shed 2bps to 0.64% while the 30-year yield finished 5bps lower at 1.28%.
In other major bond markets, German 10-year bund yields were 7bps lower at -0.54%, the French 10-year OAT yield shed 6bps to -0.07% while Italian 10-year government bond yields increased by 24bps to 1.77%. The 10-year UK gilt yield finished the month 9bps lower at 0.26%.
The best performing global fund for the month in the YieldReport April survey was the UBS Global Credit Fund. It produced an excellent return of 5.11% for the month following a bottom-quartile performance (-7.68%) in March and a second quartile performance (+0.78%) in February.
The second-highest return was produced by the Legg Mason Western Asset Macro Opportunities Bond Fund. Its return of +5.02% followed a bottom-quartile performance of -10.93% in March and worst-in-class return of -2.98% in February.
In terms of fund performance for the twelve months to the end of April 2020, Pendal’s Enhanced Global Fixed Interest (Wholesale) remained the highest performing fund. Pendal’s fund produced a 12-month return of 10.29% while the State Street Global Fixed Income Index Tracking fund remained in second place with a return of 8.89% for the year.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 2.62 | -1.08 | 4.16 | 2.48 | 1.95 | |
| Alpha Diversified Income | mFund | 0.62 | -6.12 | -0.11 | 1.90 | 2.08 |
| AMP Future Directions International Bond Fund | 1.92 | 0.20 | 5.79 | 3.44 | 2.94 | |
| AMP Capital International Bond | 1.97 | 0.35 | 6.33 | 3.98 | 3.47 | |
| ANZ-CFS Global Credit Income EF | 1.13 | -5.13 | -4.59 | -0.89 | 0.24 | |
| Ardea Real Outcome Fund | 0.52 | 1.08 | 6.52 | 5.28 | 3.85 | |
| Bentham Professional Global Income | mFund | 2.67 | -7.06 | -5.99 | 0.70 | 2.43 |
| Bentham Wholesale High Yield | mFund | 3.40 | -12.28 | -8.12 | 0.33 | 2.98 |
| Bentham Syndicated Loan ASX Class | mFund | 3.10 | -13.19 | -11.25 | -1.23 | 1.59 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.29 | -1.86 | 0.45 | 2.12 | 2.34 |
| BlackRock Wholesale International Bond | 2.09 | -1.48 | 4.56 | 3.48 | 3.53 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | 0.49 | 2.66 | 10.29 | 4.80 | 3.88 | |
| CFS Wholesale Global Corporate Bond | 4.35 | 0.28 | 8.70 | 4.98 | 4.77 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.62 | 0.00 | 1.83 | 2.07 | 2.61 | |
| Dimensional Global Bond Trust | 2.65 | -0.91 | 6.05 | 4.46 | 4.48 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.56 | 0.15 | 1.46 | 1.66 | 1.98 | |
| Franklin Templeton Global Aggregate Bd W | 0.67 | -3.85 | 3.88 | 3.21 | 2.54 | |
| Franklin Templeton Multisector Bond I | -1.08 | -6.76 | -13.04 | -4.12 | -1.44 | |
| Invesco Wholesale Senior Secured Income | mFund | 3.99 | -13.00 | -11.42 | -1.41 | 1.10 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 3.67 | -6.93 | -1.88 | 0.60 | 1.35 |
| Legg Mason Brandywine Global Fixed Income A | 3.16 | -4.89 | -0.52 | 1.64 | 1.49 | |
| Legg Mason Western Asset Global Bond Fund | 2.14 | -1.82 | 5.34 | 3.80 | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 5.02 | -9.24 | -0.76 | 2.39 | n/a | |
| Macquarie Global Income Opportunities Fd | 2.12 | -4.17 | -0.15 | 2.12 | 2.40 | |
| Macquarie Core Plus Australian Fxd Intr | 1.45 | -2.78 | 4.88 | 5.43 | 4.40 | |
| Mercer Global Credit Fund | 4.62 | -3.10 | 3.88 | 3.48 | 3.67 | |
| Mercer Global Sovereign Bond Fund | 0.92 | -0.60 | 7.15 | 5.33 | 4.80 | |
| Omega Global Corporate Bond | 3.46 | -1.09 | 6.25 | 3.75 | 3.71 | |
| PIMCO Global Bond Wholesale | mFund | 2.17 | -1.65 | 3.97 | 3.64 | 4.01 |
| PIMCO Global Credi Wholesale | mFund | 2.24 | -3.15 | 2.82 | 3.08 | 3.58 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 1.06 | -1.34 | 4.42 | 4.12 | 3.98 |
| PIMCO Unconstrained Bond Wholesale | mFund | 2.32 | -3.07 | -1.73 | 1.37 | 2.34 |
| State Street SSgA Global Fixed Income | 0.61 | 2.32 | 8.89 | 4.99 | 4.36 | |
| T.Rowe Price Dynamic Global Bond Fund | 1.26 | 5.45 | 4.40 | 1.75 | 3.15 | |
| Templeton Global Bond Plus W | -0.31 | -5.96 | -7.71 | -1.64 | -0.53 | |
| UBS Global Credit Fund | 5.11 | -2.20 | 5.73 | 4.40 | 4.34 | |
| UBS International Bond | 1.69 | -0.32 | 5.65 | 4.14 | 3.84 | |
| Vanguard International Credit Securities Index Hdg | 3.93 | -2.43 | 4.74 | 3.94 | 3.94 | |
| Vanguard International Fixed Interest Index Hdg | 1.04 | 1.94 | 7.96 | 4.71 | 4.24 |
*End of April 2020. Returns in AUD after fees.