Conditions presented a mixed bag for Australian investors in global bond funds in April. The Aussie dollar generally weakened a little against major currencies while sovereign bond yields increased modestly in all advanced-economy markets.
As in March, most of the 40 funds in the YieldReport survey finished the month with a positive return, with 34 out of the 40 funds finishing April in front.
The median 1 month performance in the YieldReport survey of global bond funds was a respectable +0.36% (previously +1.41%) while the median return over the previous 12 months came to +4.13% (March: +3.47%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned +0.03% in April and +5.08% over the previous 12 months when calculated in Australian dollars.
In US markets, by the end of the month, 2-year Treasury bond yields finished unchanged at 2.26%, 10-year yields had increased by 9bps to 2.50% and 30-year yields had gained 12bps to 2.93%. In other advanced-economy markets, German 10-year bund yields had increased by 8bps to +0.01%, UK 10-year yields had gained 19bps to 1.18%, French 10-year yields had moved 4bps higher at 0.36% and Italian 10-year yields were up 9bps to 2.56%.
(For a more detailed view of the influences on Australian and offshore yields during the month, click here)
The best performing global fund for the month in the YieldReport April survey was the Bentham Wholesale High Yield fund. It produced a return of 1.81% for the month, following an average performance in March (+0.98%) and a top-three performance in February (+1.57%).
The second-highest April return was produced by Franklin Templeton Multisector Bond Fund. Its return of +1.70% followed a “worst in class” performance in March (-2.65%) and a top-quartile performance in February (+0.76%).
In terms of fund performance for the twelve months to the end of April 2019, Macquarie’s Core Plus Australian Fixed Interest fund retained its position as the highest-returning fund for the month with a return of 9.52%, up from its comparable figure of 8.15% in March. The Dimensional Global Bond Trust followed with a 6.61% return and the Bentham Wholesale High Yield fund was next with 6.06%.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.09 | 1.54 | 2.61 | 1.69 | 2.43 | |
| Alpha Diversified Income | mFund | 0.65 | 3.12 | 5.30 | 3.06 | 3.20 |
| AMP Future Directions International Bond Fund | 0.07 | 1.74 | 3.86 | 2.08 | 3.21 | |
| AMP Capital International Bond | 0.10 | 1.87 | 4.38 | 2.60 | 3.74 | |
| ANZ-CFS Global Credit Income EF | 0.55 | 1.50 | 1.51 | 3.08 | 2.34 | |
| Ardea Real Outcome Fund | 0.60 | 2.96 | 5.83 | 5.60 | 3.89 | |
| Bentham Professional Global Income | mFund | 1.14 | 1.59 | 0.99 | 6.43 | 4.45 |
| Bentham Wholesale High Yield | mFund | 1.82 | 4.41 | 6.06 | 7.94 | 5.91 |
| Bentham Syndicated Loan ASX Class | mFund | 1.50 | 2.59 | 2.66 | 6.44 | n/a |
| Kapstream Wholesale Absolute Return Income | mFund | 0.37 | 1.39 | 3.02 | 3.05 | 3.11 |
| BlackRock Wholesale International Bond | 0.09 | 1.92 | 4.54 | 2.91 | 4.27 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | -0.62 | 1.20 | 3.45 | 1.94 | 4.00 | |
| CFS Wholesale Global Bond | 0.19 | 2.00 | 4.03 | 1.68 | 3.40 | |
| CFS Wholesale Global Corporate Bond | 0.38 | 2.82 | 4.79 | 3.78 | 4.59 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.18 | 1.18 | 3.81 | 2.26 | 3.35 | |
| Dimensional Global Bond Trust | 0.18 | 2.85 | 6.61 | 3.72 | n/a | |
| Dimensional Two-Year Diversified Fixed Interest | 0.20 | 0.85 | 2.87 | 1.93 | 2.27 | |
| Franklin Templeton Global Aggregate Bd W | 0.54 | 2.32 | 4.59 | 1.92 | n/a | |
| Franklin Templeton Multisector Bond I | 1.70 | -0.24 | -0.07 | 4.21 | 2.15 | |
| Invesco Wholesale Senior Secured Income | mFund | 1.54 | 3.13 | 3.38 | 5.58 | 4.58 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -0.48 | 0.39 | -0.07 | 2.79 | 4.35 |
| Legg Mason Brandywine Global Fixed Income A | -0.39 | 0.57 | 1.01 | 2.90 | 4.63 | |
| Legg Mason Western Asset Global Bond Fund | 0.25 | 1.57 | 3.55 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 0.87 | 1.47 | 2.57 | n/a | n/a | |
| Macquarie Global Income Opportunities Fd | 0.50 | 2.24 | 3.86 | 3.94 | 3.05 | |
| Macquarie Core Plus Australian Fxd Intr | 0.35 | 4.29 | 9.52 | 5.14 | 5.04 | |
| Mercer Global Credit Fund | 0.53 | 3.02 | 5.24 | 3.37 | 4.47 | |
| Mercer Global Sovereign Bond Fund | 0.22 | 1.98 | 5.07 | 4.11 | 5.63 | |
| Omega Global Corporate Bond | 0.02 | 2.01 | 4.22 | 2.63 | 3.82 | |
| PIMCO Global Bond Wholesale | mFund | 0.33 | 1.99 | 4.48 | 4.18 | 5.19 |
| PIMCO Global Credi Wholesale | mFund | 0.47 | 2.28 | 5.08 | 3.63 | 4.70 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.41 | 2.51 | 5.75 | 4.07 | 4.93 |
| PIMCO Unconstrained Bond Wholesale | mFund | 0.65 | 1.30 | 3.41 | 4.53 | 3.49 |
| State Street SSgA Global Fixed Income | -0.22 | 1.47 | 4.50 | 2.55 | 3.97 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.10 | -0.22 | -0.27 | 1.42 | ||
| Templeton Global Bond Plus W | 1.20 | 0.75 | 2.24 | 3.86 | 2.05 | |
| UBS Global Credit Fund | 0.98 | 3.65 | 5.86 | 4.12 | 4.76 | |
| UBS International Bond | 0.23 | 1.98 | 4.90 | 3.02 | 4.44 | |
| Vanguard International Credit Securities Index Hdg | 0.42 | 2.75 | 5.55 | 3.66 | 4.55 | |
| Vanguard International Fixed Interest Index Hdg | -0.14 | 1.41 | 4.52 | 2.62 | 4.50 |
*End of April 2019. Returns in AUD after fees.