The median 1 month performance in the YieldReport survey of global bond funds was 0.26% (previously 0.08%) while the median return over the last 12 months was 0.97% (previously 1.05%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned 0.24% in July and 0.88% over the previous 12 months when calculated in Australian dollars.
June was a challenging month for bond fund managers but July turned out to be easier, or at least fund managers in the YieldReport survey made it appear to be that way. Despite higher bond yields in most, if not all, major markets and a higher Aussie dollar, 36 of 43 funds in the YieldReport survey produced positive returns for the month.
In US markets, 2-year bonds increased by 16bps to 2.68% while 10-year and 30-year yields each added 9bps to 2.96% and 3.08% respectively. In other advanced-economy markets, German 10-year bund yields rose by 14bps to 0.44%, French and Italian 10-year yields each increased by 6bps to 0.73% and 2.73% respectively and UK gilt yields added 5bps to 1.33%. Japanese 10-year bonds moved fraction higher to 0.04%.
(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 July survey was the Franklin Templeton Multisector Bond (Institutional) fund. Its return of +3.23% follows on from near worst-in-class performances in June (-1.23%) and May (-3.46%). The second-highest return of 2.81% was produced by the Templeton Global Bond Plus Wholesale fund.
In terms of fund performance for the twelve months to July 2018, the Bentham Professional Global Income retained its position as the top-performing fund in the survey. Its 12-month return in July was a little lower than its comparable figures for May and June but the fund’s return of 5.32% was still higher than every other fund in the survey. The second-highest return of 5.10% was produced by another Bentham fund, the Bentham Professional Syndicated Loan fund.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.26 | 0.12 | 0.34 | 1.36 | 2.83 | |
| Alpha Diversified Income | mFund | 0.79 | 0.51 | 0.97 | 2.18 | 2.93 |
| AMP Future Directions International Bond Fund | 0.01 | 0.29 | 0.28 | 1.94 | 3.27 | |
| AMP Capital International Bond | 0.06 | 0.41 | 0.80 | 2.46 | 3.81 | |
| ANZ-CFS Global Credit Income EF | 0.35 | 0.16 | 1.56 | 2.83 | 2.98 | |
| Bentham Professional Global Income | mFund | 0.45 | -0.07 | 5.32 | 5.50 | 6.02 |
| Bentham Wholesale High Yield | mFund | 0.65 | 0.72 | 1.80 | 6.25 | 6.60 |
| Bentham Syndicated Loan ASX Class | mFund | 0.49 | 0.74 | 5.10 | 5.73 | 6.09 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.20 | 0.50 | 2.56 | 2.81 | 3.33 |
| BlackRock Monthly Income | 1.22 | 0.18 | 2.21 | 3.66 | 4.31 | |
| BlackRock Wholesale International Bond | -0.06 | 0.24 | 0.52 | 3.06 | 4.69 | |
| BT Global Fixed Interest Wholesale | -0.66 | 0.55 | 0.91 | 2.09 | 4.14 | |
| BT Institutional Enhanced Global Fixed Interest | -0.70 | 0.61 | 1.06 | 2.26 | 4.33 | |
| CFS Wholesale Global Bond | 0.20 | 0.08 | -0.02 | 1.94 | 3.53 | |
| CFS Wholesale Global Corporate Bond | 0.59 | 0.49 | 0.22 | 3.89 | 5.28 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.04 | 0.65 | 0.56 | 2.58 | 3.37 | |
| Dimensional Global Bond Trust | 0.05 | 1.04 | 1.40 | 3.71 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.12 | 0.50 | 0.72 | 1.83 | 2.27 | |
| Franklin Templeton Global Aggregate Bd W | 1.18 | 0.01 | 1.01 | 1.41 | ||
| Franklin Templeton Multisector Bond I | 3.23 | -1.57 | 0.93 | 2.50 | 3.20 | |
| GAM Absolute Return Bond (AU) | 0.05 | -0.27 | 0.38 | 3.60 | 2.86 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.79 | 0.85 | 4.37 | 5.16 | 4.44 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 1.54 | -1.23 | -0.34 | 3.40 | 5.20 |
| Legg Mason Brandywine Global Fixed Income A | 1.72 | -0.05 | 1.28 | 3.24 | 5.23 | |
| Legg Mason Western Asset Global Bond Fund | 0.19 | 0.03 | -0.18 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 1.59 | -2.35 | -2.32 | n/a | n/a | |
| Macquarie Global Bond | -0.37 | -0.41 | 0.17 | 1.87 | 3.22 | |
| Macquarie Global Income Opportunities Fd | 0.50 | 0.31 | 1.56 | 2.94 | 3.09 | |
| Mercer Global Credit Fund | 0.40 | 0.32 | -0.05 | 3.40 | 4.90 | |
| Mercer Global Sovereign Bond Fund | 0.22 | 0.56 | 3.43 | 4.07 | 5.65 | |
| Nikko AM International Bond | -0.38 | 0.09 | 0.63 | 2.82 | 4.42 | |
| Omega Global Corporate Bond | 0.12 | 0.43 | -0.33 | 2.92 | 3.99 | |
| PIMCO Global Bond Wholesale | mFund | 0.22 | 0.70 | 2.00 | 4.26 | 5.66 |
| PIMCO Global Credi Wholesale | mFund | 0.31 | 0.64 | 0.76 | 3.66 | 4.88 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.22 | 0.92 | 2.31 | 3.59 | 4.85 |
| PIMCO Unconstrained Bond Wholesale | mFund | 0.60 | 0.98 | 2.65 | 3.47 | N/A |
| State Street SSgA Global Fixed Income | -0.30 | 0.30 | 1.62 | 3.02 | 4.11 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.48 | -0.20 | 1.13 | 3.08 | ||
| Templeton Global Bond Plus W | 2.81 | -0.50 | 1.66 | 1.69 | 2.62 | |
| UBS Global Credit Fund | 0.87 | 0.59 | 0.41 | 3.94 | 5.08 | |
| UBS International Bond | 0.03 | 0.61 | 1.63 | 3.30 | 4.60 | |
| Vanguard International Credit Securities Index Hdg | 0.41 | 0.67 | 0.91 | 3.57 | 4.68 | |
| Vanguard International Fixed Interest Index Hdg | -0.12 | 0.40 | 1.74 | 3.16 | 4.61 |
*End of July 2018. Returns in AUD after fees.