The 10-year Australian Treasury bond yield dropped away noticeably in the first week of October before rebounding in the second week. It then trended sideways through the middle of the month, hit a high at the end of the third week before reversing course to finish close to the low for the month. By the end of October, the 3-year ACGB yield had shed 33bps to 3.34%, the 10-year yield had lost 15bps to 3.77% while the 20-year yield finished 3bps lower at 4.10%.
As a result, conditions facing fund managers in October were quite favourable. The Treasury Index, representing Commonwealth bonds, was the best performer after it returned 1.22% for the month. The Composite Index, representing a mix of federal, state and corporate bonds, produced the second-highest return of 0.93%, while the Semi-Government Index was next with a return of 0.62%. The Corporate Bond Index returned 0.39% and the FRN Index returned 0.16%.
Of the 31 managers in the YieldReport survey, 29 produced positive results and the month’s median return was +0.62%.
The Nikko AM Australian Bond Fund produced a return of 1.22% in the October survey, making it the highest returning fund for the month. The Mercer Australian Sovereign Bond Fund’s return of 1.17% was the next-highest while the Jamieson Coote Bonds Active Fund was third with a return of 1.12%.
On a 12-month basis, the Realm Strategic Income Fund (Enduring Units) retained its title as the highest performing fund in October. The Realm fund returned 5.27% while the next highest return again came from the Alexander Credit Opportunities Fund with a return of 4.66%. The Spectrum Strategic Income Fund again had the third-highest 12-month performance with a return of 0.30%.
| AUSTRALIAN FIXED INTEREST | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance Aus Fixed Intr Multi-Blend | 0.70 | -3.40 | -9.15 | -3.96 | -0.56 | |
| AMP Capital Corporate Bond | ACA02 | 0.15 | 0.27 | -1.49 | 0.87 | 1.62 |
| Alexander Credit Opportunities Fund | 0.51 | 1.67 | 4.66 | 4.44 | 4.75 | |
| AMP Flex Lifetime S2-AMP Australian Bond | 0.64 | -3.38 | -9.33 | -3.83 | -0.19 | |
| AMP Generations BlackRock Aust Fixed Interest Index | 0.82 | -3.28 | -8.30 | -4.05 | -0.45 | |
| Altius Sustainable Bond Fund | 0.57 | -1.33 | -3.86 | -1.84 | -0.06 | |
| Artesian Corporate Bond Fund | -0.20 | -0.02 | -2.50 | 0.47 | 1.70 | |
| Pendal Enhanced Credit (Wholesale) | 0.49 | -1.72 | -6.25 | -1.61 | 1.09 | |
| Pendal Fixed Interest (Wholesale) | 0.90 | -3.09 | -7.67 | -3.09 | 0.42 | |
| Pendal Government Bond | 1.10 | -3.06 | -7.50 | -3.09 | 0.74 | |
| CFS Aberdeen Australian Fixed Interest | 0.64 | -3.39 | -8.38 | -3.74 | -0.42 | |
| CFS Wholesale Australian Bond | 0.74 | -3.17 | -7.97 | -2.90 | 0.49 | |
| DDH Fixed Interest | 0.73 | -3.52 | -8.03 | -2.98 | 0.49 | |
| Spectrum Strategic Income | SPE01 | 0.10 | 0.61 | 0.30 | 1.12 | 2.34 |
| Jamieson Coote Bonds Active | 1.12 | -3.06 | -7.58 | -3.54 | 0.51 | |
| Legg Mason Western Asset Australian Bond Trust | LMA04 | 0.77 | -3.32 | -8.26 | -3.19 | 0.58 |
| Macquarie Australian Fixed Interest | 0.83 | -2.81 | -7.32 | -2.96 | 0.74 | |
| Mercer Australian Sovereign Bond Fund | 1.17 | -2.96 | -7.34 | -3.53 | 0.67 | |
| Nikko AM Australian Bond | 1.22 | -3.43 | -8.13 | -3.19 | 0.65 | |
| Henderson Australian Fixed Interest (Inst) | 0.58 | -3.65 | -9.05 | -2.86 | 0.55 | |
| Henderson Tactical Income | -0.19 | -1.18 | -2.70 | 0.45 | 1.38 | |
| Perpetual WFIA-Schroder Fixed Income | 0.47 | -3.74 | -9.11 | -3.45 | -0.06 | |
| Perpetual WFIA-Vanguard Aust Fixed Interest Index | 1.04 | -3.01 | -7.53 | -3.64 | -0.21 | |
| PIMCO Australian Bond (Wholesale) | PMF04 | 0.59 | -3.30 | -8.29 | -3.28 | 0.31 |
| PIMCO Australian Focus (Wholesale) | PMF05 | 0.15 | -2.66 | -5.18 | -1.67 | 0.64 |
| Realm High Income (Wholesale) | 0.31 | -1.00 | -1.66 | 2.04 | 2.78 | |
| Realm Strategic Income - Enduring Units | 0.63 | 1.72 | 5.27 | n/a | n/a | |
| SSgA Australian Fixed Income | 0.92 | -3.01 | -7.42 | -3.15 | 0.57 | |
| UBS Australian Bond Fund | 0.53 | -3.27 | -8.15 | -3.45 | 0.33 | |
| Vanguard Australian Fixed Interest Index | UAM04 | 0.98 | -3.02 | -7.42 | -3.18 | 0.50 |
| Vanguard Australian Govt Bond Index | 1.08 | -3.14 | -7.69 | -3.46 | 0.47 | |
| Bloomberg AusBond Composite 0+YR AUD | 0.93 | -2.98 | -7.24 | -2.97 | 0.72 |
*End of October 2022. Return in AUD after fees