Managed Funds

The 10-year Australian Treasury bond yield moved higher in the first week of January before partially retracing in the second week. It then quickly moved higher before dropping back and falling noticeably towards the end of the month. By the end of January, the 3-year ACGB yield had lost 3bps to 3.54%, the , 10-year yield had gained 6bps to 4.03% while the 20-year finished 8bps higher at 4.33%. The average 3-year BBB-rated non-financial corporate spread (to ACGBs) tightened by 1bp, as did the average 10-year spread.

As a result, conditions facing fund managers became quite different from the good times of December. The Bloomberg Ausbond FRN Index was the best performer after it returned 0.44% for the month. The Corporate Bond Index produced the second-highest return of 0.41%, while the Composite Index, representing a mix of federal, state and corporate bonds, was next with a return of 0.21%. The Semi-Government Index returned 0.19% while the Treasury Index, representing Commonwealth bonds, returned 0.16%.

All bar one of the 31 funds in the YieldReport survey produced positive results and the month’s median return was 0.23%.

The Realm High Income (Wholesale) Fund produced a return of 1.24%, making it the highest returning fund for the month. Its sibling, the Realm Strategic Income (Enduring Units) was next with a return of 0.85% while the Alexander Credit Opportunities Fund was ranked third with a return of 0.69%.

On a 12-month basis, Realm’s Strategic Income (Enduring Units) Fund took over the title as the highest performing fund. The fund returned 10.24% while the next highest return came from Realm High Income (Wholesale) Fund with a return of 9.63%. The Alexander Credit Opportunities Fund retained third place after it produced a 12-month return of 8.15%.

AUSTRALIAN FIXED INTEREST	ASX mFund	1m (%)	3m (%)	1y (%)	3y (%)	5y (%)
Advance Aus Fixed Intr Multi-Blend		0.22	6.40	2.31	-3.33	-0.24
AMP Capital Corporate Bond	ACA02	0.52	1.71	4.60	1.74	2.31
Alexander Credit Opportunities Fund		0.69	2.07	8.15	6.17	5.39
AMP Flex Lifetime S2-AMP Australian Bond		0.18	5.98	2.47	-3.20	0.01
AMP Generations BlackRock Aust Fixed Interest Index		0.18	5.82	1.98	-3.36	-0.43
Altius Sustainable Bond Fund		0.27	3.90	4.22	-0.10	0.83
Artesian Corporate Bond Fund		0.46	2.86	7.14	2.27	2.91
Pendal Enhanced Credit (Wholesale)		0.44	4.23	5.01	-0.67	1.74
Pendal Fixed Interest (Wholesale)		0.07	6.04	2.55	-2.74	0.61
Pendal Government Bond		0.18	6.56	2.58	-2.66	0.65
CFS Aberdeen Australian Fixed Interest		0.19	6.35	2.88	-2.83	-0.01
CFS Wholesale Australian Bond		0.10	5.84	2.72	-2.64	0.64
DDH Fixed Interest		0.18	6.01	2.78	-2.63	0.63
Spectrum Strategic Income	SPE01	0.41	1.90	5.39	2.57	2.80
Jamieson Coote Bonds Active		0.13	5.94	1.51	-3.31	0.14
Legg Mason Western Asset Australian Bond Trust	LMA04	0.23	6.65	3.19	-2.46	0.72
Macquarie Australian Fixed Interest		0.24	6.24	3.22	-2.26	0.84
Mercer Australian Sovereign Bond Fund		0.16	6.05	1.28	-3.21	0.19
Nikko AM Australian Bond		0.25	6.56	3.26	-2.35	0.78
Henderson Australian Fixed Interest (Inst)		0.29	7.09	3.69	-2.46	0.92
Henderson Tactical Income		0.45	3.40	6.17	1.69	2.42
Perpetual WFIA-Schroder Fixed Income		0.25	6.52	2.41	-2.99	0.23
Perpetual WFIA-Vanguard Aust Fixed Interest Index		0.20	5.86	2.11	-2.82	-0.16
PIMCO Australian Bond (Wholesale)	PMF04	0.24	6.43	2.85	-2.54	0.55
PIMCO Australian Focus (Wholesale)	PMF05	0.36	4.24	3.73	-0.68	1.15
Realm High Income (Wholesale)		1.24	5.04	9.63	4.86	5.09
Realm Strategic Income - Enduring Units		0.85	2.49	10.24	7.29	n/a
SSgA Australian Fixed Income		0.20	6.05	2.46	-2.61	0.43
UBS Australian Bond Fund		-0.07	7.08	3.40	-2.46	0.54
Vanguard Australian Fixed Interest Index	UAM04	0.21	5.96	2.29	-2.67	0.36
Vanguard Australian Govt Bond Index		0.17	6.34	1.82	-3.07	0.15
Bloomberg AusBond Composite 0+YR AUD		0.21	5.96	2.45	-2.49	0.56

^{*End of January 2024. Return in AUD after fees}