The 10-year Australian Treasury bond yield trended sideways for the first two weeks or so before rising noticeably over a few days shortly thereafter. Yields then rose steadily in trend terms for the remainder of the month. By the end of October, the 3-year ACGB yield had gained 34bps to 4.43%, the 10-year yield had added 44bps to 4.94% while the 20-year yield finished 47bps higher 5.29%. 3-year A-rated non-financial corporate spreads (to ACGBs) widened by 7bps while 10-year spreads widened by 3bps.
As a result, conditions facing fund managers remained difficult. The Bloomberg Ausbond FRN Index again was the best performer after it returned 0.37% for the month. The Corporate Bond Index produced the second-highest return of -0.77%, while the Composite Index, representing a mix of federal, state and corporate bonds, was next with a return of -1.85%. The Treasury Index, representing Commonwealth bonds, also returned -1.85% while the Semi-Government Index returned -2.53%.
Only five of the 31 funds in the YieldReport survey produced positive results and the month’s median return was -1.84%.
The Realm Strategic Income (Enduring Units) Fund produced a return of 0.88%, making it the highest returning fund for a second consecutive month. The Alexander Credit Opportunities Fund was next (again) with a return of 0.72% while the Spectrum Strategic Income Fund was ranked third (again) with a return of 0.37%.
On a 12-month basis, Realm’s Strategic Income (Enduring Units) Fund took over the title of the highest performing fund. The fund returned 9.78% while the next highest return came Realm’s High Income (Wholesale) Fund with a return of 9.11%. The Alexander Credit Opportunities Fund retained third place after producing a 12-month return of 7.75%.
| AUSTRALIAN FIXED INTEREST | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance Aus Fixed Intr Multi-Blend | -1.90 | -3.05 | -1.46 | -5.49 | -1.14 | |
| AMP Capital Corporate Bond | ACA02 | 0.32 | 0.64 | 4.64 | 1.62 | 2.01 |
| Alexander Credit Opportunities Fund | 0.72 | 2.05 | 7.75 | 6.02 | n/a | |
| AMP Flex Lifetime S2-AMP Australian Bond | -1.84 | -2.61 | -0.94 | -5.24 | -0.76 | |
| AMP Generations BlackRock Aust Fixed Interest Index | -1.89 | -2.77 | -1.68 | -5.49 | -1.15 | |
| Altius Sustainable Bond Fund | -0.87 | -1.07 | 2.75 | -1.54 | 0.15 | |
| Artesian Corporate Bond Fund | 0.15 | 1.29 | 6.61 | 1.83 | 2.39 | |
| Pendal Enhanced Credit (Wholesale) | -0.63 | -0.12 | 3.48 | -1.79 | 1.20 | |
| Pendal Fixed Interest (Wholesale) | -1.86 | -2.67 | -0.86 | -4.93 | -0.30 | |
| Pendal Government Bond | -2.04 | -3.05 | -1.53 | -5.03 | -0.14 | |
| CFS Aberdeen Australian Fixed Interest | -2.03 | -2.78 | -0.71 | -4.94 | -0.90 | |
| CFS Wholesale Australian Bond | -1.98 | -2.52 | -0.70 | -4.69 | -0.07 | |
| DDH Fixed Interest | -1.74 | -2.52 | -0.65 | -4.61 | -0.15 | |
| Spectrum Strategic Income | SPE01 | 0.37 | 1.37 | 4.58 | 2.26 | 2.51 |
| Jamieson Coote Bonds Active | -1.81 | -3.05 | -2.41 | -5.60 | -0.54 | |
| Legg Mason Western Asset Australian Bond Trust | LMA04 | -2.10 | -2.87 | -0.53 | -4.69 | -0.13 |
| Macquarie Australian Fixed Interest | -1.85 | -2.59 | -0.36 | -4.46 | 0.05 | |
| Mercer Australian Sovereign Bond Fund | -1.85 | -3.09 | -2.62 | -5.53 | -0.44 | |
| Nikko AM Australian Bond | -2.07 | -2.68 | -0.22 | -4.62 | -0.02 | |
| Henderson Australian Fixed Interest (Inst) | -2.10 | -2.88 | -0.03 | -4.71 | -0.08 | |
| Henderson Tactical Income | -0.35 | 0.38 | 5.09 | 0.86 | 1.85 | |
| Perpetual WFIA-Schroder Fixed Income | -1.91 | -2.64 | -1.20 | -5.05 | -0.68 | |
| Perpetual WFIA-Vanguard Aust Fixed Interest Index | -1.82 | -2.75 | -1.57 | -4.96 | -0.88 | |
| PIMCO Australian Bond (Wholesale) | PMF04 | -2.01 | -2.80 | -0.51 | -4.62 | -0.30 |
| PIMCO Australian Focus (Wholesale) | PMF05 | -0.86 | -0.89 | 1.90 | -2.06 | 0.56 |
| Realm High Income (Wholesale) | -0.12 | 0.34 | 9.11 | 3.18 | 3.69 | |
| Realm Strategic Income - Enduring Units | 0.88 | 2.53 | 9.78 | 7.07 | n/a | |
| SSgA Australian Fixed Income | -1.83 | -2.66 | -1.30 | -4.77 | -0.27 | |
| UBS Australian Bond Fund | -2.03 | -2.81 | -0.67 | -4.85 | -0.41 | |
| Vanguard Australian Fixed Interest Index | UAM04 | -1.82 | -2.71 | -1.36 | -4.80 | -0.33 |
| Vanguard Australian Govt Bond Index | -2.10 | -3.16 | -2.35 | -5.40 | -0.56 | |
| Bloomberg AusBond Composite 0+YR AUD | -1.85 | -2.63 | -1.18 | -4.61 | -0.13 |
*End of October 2023. Return in AUD after fees