Conditions facing global fund managers in May improved markedly from the grim environment of April. Long-term US Treasury bond yields finished the month moderately lower, yields in major euro-zone countries increased modestly while UK yields hardly moved. However, the Aussie dollar was stronger against the US dollar and other major currencies. 27 of the 30 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 May was 0.82% (April: -1.77%) while the median return over the 12 months including May was 2.96% (April: -0.28%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned 0.83% over the month and 1.24% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield lost 17bps at 4.87%, the 10-year yield shed 18bps to 4.50% while the 30-year yield finished 13bps lower at 4.65%. BBB corporate spreads tightened modestly.
In other major bond markets, the German 10-year bund yield gained 12bps to 2.67% while the French 10-year OAT yield added 10bbps to 3.13%. The 10-year UK gilt yield finished the month 1bp higher at 4.42%.
The best performing global fund for the month in the YieldReport May survey was the Western Asset Macro Opportunities Bond Fund which produced a return of 2.48%. The second-highest return for the month, 1.60%, was produced by the Legg Mason Brandywine Global Opportunistic Fixed Income Fund while the PIMCO Global Credit (Wholesale) Fund was next with a return of 1.48%.
In terms of fund performance for the twelve months to the end of May, the Bentham Professional Syndicated Loan Fund retained the title as highest performing fund. It produced 12-month return of 11.47% while the Bentham Wholesale High Yield Fund moved back into second place with a return of 9.95%. The Invesco Wholesale Senior Secured Income Fund slipped back to third position after it returned 9.40%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.85 | -0.25 | 2.57 | -3.21 | -0.98 | |
| ANZ-CFS Global Credit Income EF | 0.37 | 1.31 | 6.22 | 1.76 | 1.28 | |
| Ardea Real Outcome Fund | -0.91 | -0.69 | 0.32 | 0.72 | 2.50 | |
| Bentham Professional Global Income | mFund | 0.53 | 0.33 | 5.92 | 2.90 | 3.85 |
| Bentham Wholesale High Yield | mFund | 1.16 | 1.38 | 9.95 | 1.68 | 2.94 |
| Bentham Syndicated Loan ASX Class | mFund | 1.01 | 1.86 | 11.47 | 4.43 | 3.78 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.67 | 1.42 | 5.70 | 2.34 | 1.95 |
| CFS Wholesale Global Corporate Bond | -1.97 | -2.81 | 0.35 | -4.33 | -0.35 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.38 | 1.09 | 4.04 | -1.03 | -0.16 | |
| Dimensional Global Bond Trust | 0.73 | -0.05 | 3.36 | -3.31 | -0.76 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.38 | 1.10 | 4.36 | 0.54 | 0.74 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 1.01 | -0.29 | 1.34 | -2.73 | -0.51 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.53 | 1.13 | 9.40 | 3.98 | 3.87 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 1.60 | -1.73 | -1.87 | -4.03 | -0.36 |
| Legg Mason Western Asset Global Bond Fund | 1.02 | -1.02 | 0.67 | -4.11 | -0.66 | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 2.48 | -3.21 | -0.37 | -17.40 | -8.80 | |
| Macquarie Global Income Opportunities Fund | 0.79 | 0.76 | 4.89 | 0.89 | 1.66 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 0.86 | -0.38 | 1.10 | -2.91 | -0.74 | |
| Mercer Global Credit Fund | 1.11 | 0.51 | 2.97 | -3.53 | -0.40 | |
| Mercer Global Sovereign Bond Fund | 0.75 | -0.40 | -0.52 | -3.03 | -0.59 | |
| PIMCO Global Bond (Wholesale) | mFund | 1.00 | 0.77 | 3.94 | -2.49 | 0.01 |
| PIMCO Global Credi (Wholesale) | mFund | 1.48 | 0.50 | 2.94 | -3.04 | -0.36 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.78 | 0.27 | 2.84 | -2.28 | -0.22 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | 0.99 | 1.33 | 5.78 | -1.15 | 0.72 |
| State Street SSgA Global Fixed Income Trust | 0.42 | -0.71 | -0.10 | -4.09 | -1.53 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.07 | 1.55 | -1.71 | -0.87 | 1.32 | |
| UBS Global Credit Fund | 1.32 | 0.39 | 3.37 | -3.74 | -0.15 | |
| UBS International Bond | 0.94 | -0.14 | 1.36 | -3.21 | -0.75 | |
| Vanguard International Credit Securities Index (Hedged) | 1.05 | 0.25 | 3.05 | -3.44 | -0.60 | |
| Vanguard International Fixed Interest Index (Hedged) | 0.26 | -0.80 | -0.08 | -3.66 | -1.43 |
*End of May 2024. Return in AUD after fees