Global Bond Funds April 2017

Global fixed interest April performance

 The median 1 month performance in the YieldReport survey of global bond funds was 0.70% (previously 0.18%) and the median return over the last 12 months was 3.55% (previously 3.50%). April proved to be much more favourable to bond investors as a whole and, specifically, bondholders who had offshore holdings. Accordingly 44 of 45 funds in the YieldReport survey finished the month with a positive return.

Bond yields began to fall from the start of the month as markets moved away from risky assets.  However, around mid-month yields started to rise and even after disappointing US Q1 GDP figures, yields still tended to go higher. In the U.S., the yield on 2 year bonds rose 1bp to 1.27% while 10 year bond yields fell 10bps. In other markets, 10 year bond yields were typically lower as U.S. drivers of higher yields were not fully factored-in, with the exception of the Japanese market where the BoJ has the 10 year bond yield tethered to zero and Italy, where bond yields behave in a more random manner. In the U.K. the 10 year bond yield fell 5bps to 1.08%, in Germany it edged down 1bp to 0.32%. In France the yield dropped 12bps to 0.84%.

The best performer for April in the YieldReport survey was the Bentham Wholesale High Yield fund. After a below-average performance in March, the Bentham fund produced a very solid 1.31%, the result of lower credit spreads and a duration of just under 4 years which helped as bond yields fell.  In second place was the Legg Mason Western Asset Macro Opportunities Bond Fund with a return of 1.23% while the DDH Global Fixed Interest Alpha fund returned 1.15% to put it in third place.

In the 12 month time period, Bentham Wholesale High Yield fund retained its top spot with a return of 14.40%. The fund has slightly decreased its holdings of high yield bonds from 94% at the end of March to just under 93% at the end of April. The rest of the portfolio comprises cash and derivatives.

GLOBAL BOND FUNDS