The median 1 month performance in the YieldReport survey of global bond funds was -0.42% (previously +0.47%) while the median return over the last 12 months was 1.57% (previously 2.84%).
April represented a return to tough conditions for global bond funds after a reprieve in March. Yields increased in Europe by modest amounts while in the US yields finished the month substantially higher. Unhedged funds gained some relief as the Aussie dollar weakened against USD, although it did increase against yen. Only 12 of 43 funds in the YieldReport survey produced positive returns for the month.
Yields in European bond markets finished April a little higher in but they were noticeably higher in the US. In US markets, 2 year bond yields increased by 23bps to 2.49%, 10 year yields gained 21bps to 2.95% and 30 year yields added 15bps to 3.12%. In European markets, German 10 year bund yields gained 6bps to 0.56%, French and UK 10 year yields both increased by 7bps to 0.79% and 1.42% respectively. Italian bond yields slipped 1bp to 1.42%.
The best performing global fund for the month in the YieldReport survey was the Bentham Professional Global Income Fund. Its return of +0.84% follows on from a worst-in-class performance in March (-0.57%) and a top-quintile performance in February (+0.18%).
The second-highest return of +0.70% was produced by the Templeton Global Bond Plus Wholesale fund and the third highest result came from Invesco Wholesale Senior Secured Income fund (+0.59%).
In terms of fund performance for the twelve months to April 2018, the Bentham Professional Global Income dislodged the Legg Mason Western Asset Macro Opportunities Bond Fund from top spot. The Bentham fund returned +7.47% for the period, whereas in March its 12 month return was 7.22% when it was ranked second. This fund had an effective duration of -2.6 years.
At the end of April, the fund’s assets were invested in global syndicated loans (41.2%), bank capital securities (18.0%) with a bit under 20% in cash, basis trades and derivatives. The balance was invested in residential mortgage-backed securities (RMBS), asset-backed securities, collateralised loan obligations (CLO), corporate credit, high yield securities and European convertibles.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.54 | -0.39 | 0.70 | 1.01 | 2.07 | |
| Alpha Diversified Income | mFund | 0.14 | 0.73 | 1.09 | 1.93 | 2.56 |
| AMP Future Directions International Bond Fund | -0.47 | -0.23 | 0.74 | 1.71 | 2.85 | |
| AMP Capital International Bond | -0.43 | -0.09 | 1.28 | 2.24 | 3.38 | |
| ANZ-CFS Global Credit Income EF | 0.30 | -0.22 | 2.44 | 2.66 | 3.10 | |
| Bentham Professional Global Income | mFund | 0.84 | 0.44 | 7.47 | 5.84 | 6.61 |
| Bentham Wholesale High Yield | mFund | 0.41 | -1.09 | 3.65 | 5.93 | 6.56 |
| Bentham Syndicated Loan ASX Class | mFund | 0.53 | 0.82 | 5.56 | 5.77 | 6.25 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.17 | 0.36 | 2.90 | 2.75 | 3.34 |
| BlackRock Monthly Income | 0.42 | -0.82 | 4.30 | 3.56 | 4.77 | |
| BlackRock Wholesale International Bond | -0.59 | -0.55 | 1.36 | 2.85 | 4.31 | |
| BT Global Fixed Interest Wholesale | -0.61 | 0.28 | 0.75 | 1.79 | 3.42 | |
| BT Institutional Enhanced Global Fixed Interest | -0.60 | 0.32 | 0.90 | 1.96 | 3.60 | |
| CFS Wholesale Global Bond | -0.42 | -0.65 | 0.25 | 1.81 | 3.30 | |
| CFS Wholesale Global Corporate Bond | -0.63 | -1.63 | 1.57 | 3.48 | 4.61 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.03 | 0.23 | 0.59 | 2.48 | 3.04 | |
| Dimensional Global Bond Trust | -0.42 | 0.21 | 0.83 | 3.27 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.05 | 0.14 | 0.67 | 1.85 | 2.27 | |
| Franklin Templeton Global Aggregate Bd W | -0.76 | 0.69 | 1.20 | 1.43 | ||
| Franklin Templeton Multisector Bond I | 0.51 | 0.83 | 1.44 | 2.29 | 2.70 | |
| GAM Absolute Return Bond (AU) | 0.00 | -0.21 | 2.64 | 3.95 | 2.71 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.59 | 0.99 | 4.65 | 4.88 | 4.34 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -0.83 | -0.95 | 3.75 | 2.89 | 4.56 |
| Legg Mason Brandywine Global Fixed Income A | -0.93 | -0.77 | 4.49 | 2.33 | 4.38 | |
| Legg Mason Western Asset Global Bond Fund | -0.98 | -1.07 | 2.52 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -2.12 | -2.96 | 5.44 | n/a | n/a | |
| Macquarie Global Bond | -0.48 | 0.62 | 0.88 | 1.66 | 3.51 | |
| Macquarie Global Income Opportunities Fd | -0.04 | -0.35 | 2.68 | 2.78 | 3.10 | |
| Mercer Global Credit Fund | -0.45 | -1.25 | 1.37 | 3.08 | 4.30 | |
| Mercer Global Sovereign Bond Fund | -0.15 | 1.63 | 3.78 | 3.93 | 5.24 | |
| Nikko AM International Bond | -0.48 | 0.62 | 0.79 | 2.59 | 4.10 | |
| Omega Global Corporate Bond | -0.48 | -1.10 | 0.85 | 2.70 | 2.98 | |
| PIMCO Global Bond Wholesale | mFund | -0.40 | -0.02 | 2.47 | 3.87 | 4.67 |
| PIMCO Global Credi Wholesale | mFund | -0.47 | -0.60 | 1.36 | 3.33 | 4.23 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -0.42 | 0.29 | 2.23 | 3.26 | 4.15 |
| PIMCO Unconstrained Bond Wholesale | mFund | -0.08 | -0.18 | 2.51 | 3.40 | N/A |
| State Street SSgA Global Fixed Income | -0.48 | 0.79 | 1.71 | 2.84 | 3.69 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.21 | 0.22 | 1.20 | 3.90 | ||
| Templeton Global Bond Plus W | 0.70 | 0.91 | 0.84 | 1.05 | 1.57 | |
| UBS Global Credit Fund | -0.53 | -1.52 | 1.67 | 3.38 | 4.37 | |
| UBS International Bond | -0.46 | -0.03 | 1.92 | 2.94 | 4.00 | |
| Vanguard International Credit Securities Index Hdg | -0.45 | -0.81 | 1.57 | 3.15 | 4.02 | |
| Vanguard International Fixed Interest Index Hdg | -0.39 | 0.79 | 1.73 | 2.93 | 4.15 |
*End of April 2018. Returns in AUD after fees.