The median 1 month performance in the YieldReport survey of global bond funds was +0.12% (previously +0.46%) and the median return over the last 12 months was 3.61% (previously 3.00%). While government bond yields in major markets were either flat or slightly higher, the Aussie dollar weakened against all major currencies. Gains made by funds were thus either through tighter spreads or currency-related.
By the end of the November U.S. yields were up a few basis points, as were European yields to some extent. U.S. 10 year bond yields added 4bps to 2.41%, French 10 year yields increased by 6bps to 0.68% but the yields on U.K 10 year gilts and German 10 year bunds remained unchanged at 1.33% and 0.37% respectively. Italian yields fell again, this time by 9bps to 1.73%.
The best performing global fund for November in the YieldReport survey was the Legg Mason Western Asset Macro Opportunities Bond Fund. Its return of 1.08% follows a tough October where the fund produced a worst-in-class return of -0.96%. The second-highest return of 0.88% was produced by Franklin Templeton Global Aggregate Bond Wholesale fund while the Bentham Professional Global Income fund produced the third-highest return of the month with 0.72%.
In terms of fund performance for the twelve months to November 2017, the Legg Mason Western Asset Macro Opportunities Bond Fund took first place with a return of 15.94%. This fund had around 70% of its assets denominated in USD, with the balance denominated in an array of emerging market currencies. It is an “unconstrained” fund and the average credit rating of its assets is A-. Its credit duration was 4.6 years at the time.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.05 | 0.04 | 3.13 | 1.95 | 2.92 | |
| Alpha Diversified Income | mFund | 0.07 | 0.29 | 2.61 | 2.56 | 2.90 |
| AMP Future Directions International Bond Fund | 0.06 | -0.01 | 3.34 | 2.66 | 3.66 | |
| AMP Capital International Bond | 0.10 | 0.12 | 3.87 | 3.19 | 4.20 | |
| ANZ-CFS Global Credit Income EF | -0.14 | 1.00 | 4.28 | 2.89 | 3.63 | |
| Bentham Professional Global Income | mFund | 0.72 | 2.80 | 9.34 | 5.82 | 7.31 |
| Bentham Wholesale High Yield | mFund | -0.05 | 1.50 | 11.23 | 7.37 | 8.20 |
| Bentham Syndicated Loan ASX Class | mFund | 0.17 | 1.96 | 7.72 | 6.18 | 6.92 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.27 | 0.91 | 3.45 | 3.10 | 3.64 |
| BlackRock Monthly Income | 0.04 | 1.88 | 6.34 | 3.98 | 5.89 | |
| BlackRock Wholesale International Bond | 0.03 | 0.06 | 4.17 | 4.03 | 5.06 | |
| BT Global Fixed Interest Wholesale | 0.21 | -0.29 | 2.02 | 2.94 | 4.09 | |
| BT Institutional Enhanced Global Fixed Interest | 0.22 | -0.25 | 2.21 | 3.12 | 4.28 | |
| CFS Wholesale Global Bond | 0.23 | -0.03 | 2.37 | 3.21 | 4.03 | |
| CFS Wholesale Global Corporate Bond | -0.14 | 0.53 | 6.44 | 4.96 | 5.77 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.13 | -0.18 | 2.80 | 3.34 | 3.54 | |
| Dimensional Global Bond Trust | 0.06 | -0.04 | 4.38 | 4.58 | ||
| Dimensional Two-Year Diversified Fixed Interest | -0.09 | -0.04 | 1.83 | 2.27 | 2.59 | |
| Franklin Templeton Global Aggregate Bd W | 0.73 | 0.09 | 2.34 | 2.82 | ||
| Franklin Templeton Multisector Bond I | 0.43 | 1.14 | 7.61 | 1.90 | 4.14 | |
| GAM Absolute Return Bond (AU) | -0.47 | -0.18 | 5.59 | 3.61 | 3.33 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.13 | 1.26 | 5.15 | 4.95 | 4.23 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -0.06 | -1.39 | 7.28 | 3.41 | 6.07 |
| Legg Mason Brandywine Global Fixed Income A | 0.12 | 1.38 | 6.70 | 3.05 | 5.64 | |
| Legg Mason Western Asset Global Bond Fund | 0.25 | 0.08 | ||||
| Legg Mason Western Asset Macro Opportunities Bond Fund | 1.08 | 0.70 | 15.94 | |||
| Macquarie Global Bond | 0.20 | -0.25 | 1.55 | 2.82 | 4.01 | |
| Macquarie Global Income Opportunities Fd | 0.12 | 1.13 | 5.44 | 3.34 | 3.84 | |
| Mercer Global Credit Fund | 0.01 | 0.40 | 5.28 | 4.50 | 5.32 | |
| Mercer Global Sovereign Bond Fund | 0.47 | 0.74 | 4.45 | 4.99 | 5.65 | |
| Nikko AM International Bond | 0.21 | -0.20 | 3.20 | 3.86 | 4.80 | |
| Omega Global Corporate Bond | -0.11 | -0.20 | 4.84 | 3.97 | 3.96 | |
| PIMCO Global Bond Wholesale | mFund | 0.11 | 0.46 | 5.79 | 5.15 | 5.41 |
| PIMCO Global Credi Wholesale | mFund | 0.01 | 0.36 | 5.74 | 4.79 | 5.18 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.50 | 1.11 | 4.93 | 4.48 | 4.77 |
| PIMCO Unconstrained Bond Wholesale | mFund | 0.12 | 0.79 | 6.27 | 3.54 | N/A |
| State Street SSgA Global Fixed Income | 0.25 | 0.10 | 2.73 | 3.08 | 4.26 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.01 | 0.24 | 0.80 | 4.63 | ||
| Templeton Global Bond Plus W | 0.27 | 0.87 | 6.80 | 0.82 | 2.54 | |
| UBS Global Credit Fund | -0.14 | 0.59 | 6.60 | 4.86 | 5.36 | |
| UBS International Bond | 0.16 | 0.64 | 3.86 | 4.09 | 4.60 | |
| Vanguard International Credit Securities Index Hdg | 0.05 | 0.40 | 5.37 | 4.37 | 4.84 | |
| Vanguard International Fixed Interest Index Hdg | 0.24 | 0.09 | 2.60 | 3.91 | 4.68 |
*End of November 2017. Returns in AUD after fees.