Global bond fund managers had performed well in July despite the headwinds of higher bonds yields and a higher Aussie dollar. In August, it was the reverse; lower yields and a lower Aussie dollar. However, despite the presence of what would be considered as more favourable conditions, a larger number of funds in the YieldReport survey fell out of the black and into the red.
The median 1 month performance in the YieldReport survey of global bond funds was 0.18% (previously 0.26%) while the median return over the last 12 months was 0.37% (previously 0.97%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned 0.32% in August and 0.80% over the previous 12 months when calculated in Australian dollars.
In US markets, 2-year Treasury bond yields fell by 6bps to 2.62%, 10-year yields dropped by 10bps to 2.86% and 30-year yields fell by 6bps to 3.02%. In other advanced-economy markets, German 10-year bund yields dropped by 12bps to 0.33%, French and UK 10-year yields each decreased by 5bps to 0.68% and 1.28% respectively. Italian 10-year yields blew out spectacularly, jumping by 50bps to 3.23%.
(For a more detailed view of the influences on Australian and offshore yields during the month, click here)
The best performing global fund for the month in the YieldReport August survey was the Bentham Wholesale High Yield fund. Its return of +0.69% follows on from solid performances in July (+0.65%) and June (+0.18%). The second-highest return of +0.65% was produced by the Dimensional Global Bond Trust.
In terms of fund performance for the twelve months to August 2018, the Bentham Professional Global Income retained its position for a third consecutive month as the top-performing fund in the survey. Its 12-month return of 5.69% picked up after declining from May (5.89%) through to July (5.32%).
The second-highest return of 5.36% was produced by another Bentham fund, the Bentham Professional Syndicated Loan fund.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.33 | -0.06 | -0.79 | 1.60 | 2.87 | |
| Alpha Diversified Income | mFund | 0.18 | 1.11 | 1.00 | 2.30 | 3.05 |
| AMP Future Directions International Bond Fund | 0.29 | 0.33 | -0.23 | 2.20 | 3.58 | |
| AMP Capital International Bond | 0.32 | 0.46 | 0.29 | 2.72 | 4.12 | |
| ANZ-CFS Global Credit Income EF | 0.04 | 0.30 | 1.95 | 3.12 | 3.01 | |
| Bentham Professional Global Income | mFund | 0.23 | 0.94 | 5.69 | 5.81 | 5.88 |
| Bentham Wholesale High Yield | mFund | 0.69 | 1.52 | 2.51 | 7.07 | 6.77 |
| Bentham Syndicated Loan ASX Class | mFund | 0.40 | 1.04 | 5.36 | 6.15 | 6.07 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.34 | 0.70 | 2.66 | 2.93 | 3.35 |
| BlackRock Monthly Income | -0.17 | 0.74 | 2.53 | 3.82 | 4.17 | |
| BlackRock Wholesale International Bond | -0.02 | 0.07 | -0.31 | 3.09 | 4.70 | |
| BT Global Fixed Interest Wholesale | 0.15 | 0.20 | 0.00 | 1.91 | 4.22 | |
| BT Institutional Enhanced Global Fixed Interest | 0.16 | 0.24 | 0.15 | 2.09 | 4.41 | |
| CFS Wholesale Global Bond | 0.22 | 0.32 | -0.83 | 2.08 | 3.53 | |
| CFS Wholesale Global Corporate Bond | 0.39 | 0.54 | -0.03 | 4.29 | 5.43 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.46 | 0.59 | 0.51 | 2.69 | 3.52 | |
| Dimensional Global Bond Trust | 0.65 | 0.84 | 0.86 | 4.05 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.31 | 0.51 | 0.78 | 1.87 | 2.28 | |
| Franklin Templeton Global Aggregate Bd W | -0.31 | 1.12 | -0.14 | 1.13 | ||
| Franklin Templeton Multisector Bond I | -5.26 | -3.40 | -4.51 | 1.93 | 2.41 | |
| GAM Absolute Return Bond (AU) | -0.76 | -0.99 | -0.43 | 3.65 | 2.73 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.37 | 1.06 | 4.83 | 5.58 | 4.50 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -2.84 | -1.79 | -3.80 | 3.57 | 4.88 |
| Legg Mason Brandywine Global Fixed Income A | -2.52 | -1.05 | -1.87 | 3.43 | 4.92 | |
| Legg Mason Western Asset Global Bond Fund | -0.28 | -0.14 | -1.18 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -3.59 | -3.27 | -6.71 | n/a | n/a | |
| Macquarie Global Income Opportunities Fd | 0.26 | 0.64 | 1.75 | 3.07 | 3.08 | |
| Mercer Global Credit Fund | 0.36 | 0.47 | -0.19 | 3.67 | 5.07 | |
| Mercer Global Sovereign Bond Fund | -0.73 | 0.66 | 1.59 | 3.87 | 5.53 | |
| Nikko AM International Bond | 0.18 | 0.04 | -0.26 | 2.81 | 4.48 | |
| Omega Global Corporate Bond | 0.63 | 0.47 | -0.59 | 3.27 | 4.30 | |
| PIMCO Global Bond Wholesale | mFund | 0.11 | 0.52 | 1.01 | 4.48 | 5.84 |
| PIMCO Global Credi Wholesale | mFund | 0.56 | 0.87 | 0.51 | 3.96 | 5.07 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.41 | 0.93 | 2.20 | 3.73 | 5.07 |
| PIMCO Unconstrained Bond Wholesale | mFund | -0.09 | 0.30 | 1.87 | 3.91 | N/A |
| State Street SSgA Global Fixed Income | 0.06 | 0.14 | 0.60 | 3.05 | 4.14 | |
| T.Rowe Price Dynamic Global Bond Fund | -1.08 | -0.29 | -0.46 | 2.58 | ||
| Templeton Global Bond Plus W | -3.87 | -1.91 | -2.50 | 1.80 | 2.16 | |
| UBS Global Credit Fund | 0.37 | 0.88 | 0.07 | 4.30 | 5.23 | |
| UBS International Bond | 0.30 | 0.45 | 1.15 | 3.54 | 4.73 | |
| Vanguard International Credit Securities Index Hdg | 0.47 | 0.73 | 0.45 | 3.89 | 4.86 | |
| Vanguard International Fixed Interest Index Hdg | 0.08 | 0.20 | 0.84 | 3.20 | 4.64 |
*End of August 2018. Returns in AUD after fees.