The 10-year Australian Treasury bond yield trended sideways for the first two weeks of May, trading in a 15bps range. From there, yields began an uptrend which peaked a few days before the end of the month. By the end of it, the 3-year ACGB yield had gained 39bps to 3.37%, the 10-year yield had added 27bps to 3.61% while the 20-year yield finished 25bps higher at 4.03%.
As a result, conditions facing fund managers deteriorated from the challenging environment of April to be somewhat ugly. The Bloomberg Ausbond FRN Index again was the best performer after it returned 0.34% for the month. The Corporate Bond Index produced the second-highest return of -0.51%, while the Composite Index, representing a mix of federal, state and corporate bonds, was next with a return of -1.21%. The Semi-Government Index returned -1.26% while the Treasury Index, representing Commonwealth bonds, returned -1.39%.
Of the 31 funds in the YieldReport survey, only seven produced positive results and the month’s median return was -1.19%.
The Realm Strategic Income Fund (Enduring Units) produced a return of 0.80%, making it the highest returning fund for a second consecutive month. The Realm High Income (Wholesale) Fund’s return of 0.64% was the next-highest while the Alexander Credit Opportunities Fund was third with a return of 0.62%.
On a 12-month basis, the Realm Strategic Income Fund (Enduring Units) retained its title as the highest performing fund. The Realm fund returned 7.90% while the next highest return again came from the Alexander Credit Opportunities Fund with a return of 6.54%. Realm’s High Income (Wholesale) Fund retained third position with a 12-month return of 4.98%.
| AUSTRALIAN FIXED INTEREST | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance Aus Fixed Intr Multi-Blend | -1.21 | 1.88 | 1.30 | -3.38 | -0.06 | |
| AMP Capital Corporate Bond | ACA02 | 0.23 | 0.80 | 3.07 | 1.97 | 1.93 |
| Alexander Credit Opportunities Fund | 0.62 | 1.85 | 6.54 | 5.98 | 5.04 | |
| AMP Flex Lifetime S2-AMP Australian Bond | -1.27 | 1.88 | 1.19 | -3.07 | 0.29 | |
| AMP Generations BlackRock Aust Fixed Interest Index | -1.23 | 2.01 | 0.95 | -3.68 | -0.09 | |
| Altius Sustainable Bond Fund | -0.12 | 1.72 | 3.72 | -0.54 | 0.55 | |
| Artesian Corporate Bond Fund | 0.29 | 1.07 | 3.99 | 2.22 | 2.17 | |
| Pendal Enhanced Credit (Wholesale) | -0.51 | 1.84 | 2.92 | -0.86 | 1.57 | |
| Pendal Fixed Interest (Wholesale) | -1.16 | 2.36 | 2.02 | -3.03 | 0.79 | |
| Pendal Government Bond | -1.24 | 2.40 | 2.03 | -2.92 | 1.08 | |
| CFS Aberdeen Australian Fixed Interest | -1.14 | 1.96 | 1.61 | -2.85 | 0.05 | |
| CFS Wholesale Australian Bond | -1.11 | 2.16 | 1.52 | -2.77 | 0.96 | |
| DDH Fixed Interest | -1.21 | 2.14 | 2.05 | -2.58 | 0.92 | |
| Spectrum Strategic Income | SPE01 | 0.30 | 0.51 | 2.74 | 2.05 | 2.39 |
| Jamieson Coote Bonds Active | -1.27 | 2.34 | 1.74 | -3.55 | 0.76 | |
| Legg Mason Western Asset Australian Bond Trust | LMA04 | -1.15 | 2.25 | 2.13 | -2.60 | 1.01 |
| Macquarie Australian Fixed Interest | -1.19 | 2.24 | 2.58 | -2.53 | 1.15 | |
| Mercer Australian Sovereign Bond Fund | -1.42 | 2.14 | 1.49 | -3.53 | 0.85 | |
| Nikko AM Australian Bond | -1.30 | 2.35 | 2.22 | -2.60 | 1.10 | |
| Henderson Australian Fixed Interest (Inst) | -1.19 | 1.99 | 2.39 | -2.38 | 1.07 | |
| Henderson Tactical Income | 0.32 | 0.68 | 3.29 | 1.18 | 1.83 | |
| Perpetual WFIA-Schroder Fixed Income | -1.42 | 1.77 | 1.05 | -2.89 | 0.36 | |
| Perpetual WFIA-Vanguard Aust Fixed Interest Index | -1.19 | 2.03 | 1.32 | -3.24 | 0.17 | |
| PIMCO Australian Bond (Wholesale) | PMF04 | -1.14 | 1.89 | 1.83 | -2.41 | 0.80 |
| PIMCO Australian Focus (Wholesale) | PMF05 | -0.32 | 1.82 | 2.05 | -0.91 | 1.07 |
| Realm High Income (Wholesale) | 0.64 | 0.32 | 4.98 | 3.33 | 4.28 | |
| Realm Strategic Income - Enduring Units | 0.80 | 2.38 | 7.90 | 6.41 | n/a | |
| SSgA Australian Fixed Income | -1.22 | 2.09 | 1.57 | -2.93 | 0.85 | |
| UBS Australian Bond Fund | -1.32 | 2.27 | 1.98 | -2.75 | 0.77 | |
| Vanguard Australian Fixed Interest Index | UAM04 | -1.19 | 2.08 | 1.56 | -2.96 | 0.80 |
| Vanguard Australian Govt Bond Index | -1.41 | 2.11 | 1.30 | -3.34 | 0.70 | |
| Bloomberg AusBond Composite 0+YR AUD | -1.21 | 2.11 | 1.73 | -2.77 | 1.00 |
*End of May 2023. Return in AUD after fees