Conditions became challenging for global fund managers in August. Longer-term US Treasury bond yields finished the month moderately higher, as did yields in the UK and major euro-zone economies. The Aussie dollar was weaker against the USD and the yen but stronger against the euro and sterling. 12 out of 37 funds in the YieldReport survey finished the month with a positive return.
The median 1 month performance in the YieldReport survey of global bond funds in August was -0.12% (July: 0.96%) while the median return over the 12 months including August came to 1.77% (July: 1.55%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.24% in August and 0.48% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield added 2bps to 0.20% over the month, the 10-year yield gained 8bps to 1.31% and the 30-year yield rose by 4bps to 1.93%. BBB spreads were almost unchanged overall.
In other major bond markets, the German and French 10-year bond yields each gained 7bps to -0.39% and -0.03% while the 10-year UK gilt yield finished the month 6bps higher at 0.62%.
The best performing global fund for the month in the YieldReport August survey was Legg Mason Western Asset Macro Opportunities Bond Fund. It produced a return of +1.49% for the month following a third-quartile return of 0.21% in July and a top-performing return of 2.94% in June.
The second-highest return was produced by the Franklin Templeton Multisector Bond (Institutional) Fund. Its return of +1.35% followed worst-in-class returns of -1.30% in July and -1.32% in June.
In terms of fund performance for the twelve months to the end of August, the Invesco Wholesale Senior Secured Income retained its title as the highest performing fund for a sixth consecutive month. The Invesco fund produced a 12-month return of 11.87%, with the Bentham Professional Syndicated Loan also retaining its second-highest ranking after it produced a return of 9.05%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.18 | 1.15 | 0.69 | 3.35 | 1.93 | |
| Alpha Diversified Income | mFund | -0.07 | 1.08 | 1.03 | 2.01 | 1.65 |
| AMP Future Directions International Bond Fund | -0.25 | 1.39 | -0.67 | 3.38 | 2.06 | |
| AMP Capital International Bond | -0.20 | 1.54 | -0.13 | 3.92 | 2.59 | |
| ANZ-CFS Global Credit Income EF | -0.06 | -0.04 | 2.22 | 0.38 | 0.98 | |
| Ardea Real Outcome Fund | -0.27 | -0.82 | 1.50 | 5.27 | 4.85 | |
| Bentham Professional Global Income | mFund | 0.36 | 0.16 | 8.52 | 3.55 | 5.24 |
| Bentham Wholesale High Yield | mFund | 0.62 | 1.80 | 8.83 | 4.97 | 5.56 |
| Bentham Syndicated Loan ASX Class | mFund | 0.47 | 0.68 | 9.05 | 2.48 | 4.23 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.01 | 0.23 | 1.43 | 1.84 | 2.18 |
| BlackRock Wholesale International Bond | -0.19 | 1.43 | 1.78 | 4.84 | 3.11 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | -0.29 | 1.58 | -1.33 | 3.65 | 2.00 | |
| CFS Wholesale Global Corporate Bond | -0.40 | 2.02 | 1.11 | 6.23 | 4.30 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.17 | 0.46 | 0.91 | 1.99 | 1.65 | |
| Dimensional Global Bond Trust | -0.31 | 2.38 | 1.19 | 5.05 | 3.43 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.00 | 0.04 | 0.31 | 1.49 | 1.48 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 0.08 | 1.47 | 1.16 | 4.48 | 2.14 | |
| Franklin Templeton Multisector Bond (Institutional) | 1.35 | -1.29 | 1.07 | -2.11 | -0.40 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.75 | 1.36 | 11.87 | 3.47 | 4.32 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 0.32 | -0.08 | 6.73 | 5.20 | 3.60 |
| Legg Mason Western Asset Global Bond Fund | 0.17 | 1.45 | 2.70 | 5.23 | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 1.49 | 4.69 | 4.85 | 8.04 | 5.54 | |
| Macquarie Global Income Opportunities Fund | 0.34 | 1.31 | 3.46 | 3.49 | 3.28 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 0.43 | 3.68 | 2.97 | 6.01 | 4.17 | |
| Mercer Global Credit Fund | -0.17 | 2.02 | 2.17 | 5.52 | 3.65 | |
| Mercer Global Sovereign Bond Fund | -0.18 | 1.64 | -0.24 | 4.86 | 3.39 | |
| Omega Global Corporate Bond | -0.45 | 1.54 | 0.28 | 4.15 | 2.69 | |
| PIMCO Global Bond (Wholesale) | mFund | -0.11 | 1.19 | 2.27 | 4.63 | 3.66 |
| PIMCO Global Credi (Wholesale) | mFund | -0.12 | 1.44 | 2.67 | 4.64 | 3.47 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -0.07 | 1.73 | 1.77 | 4.49 | 3.39 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -0.09 | -0.09 | 3.51 | 3.24 | 3.68 |
| State Street SSgA Global Fixed Income Trust | -0.35 | 1.69 | -0.49 | 4.14 | 2.52 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.25 | -2.00 | 2.30 | 3.54 | 2.12 | |
| UBS Global Credit Fund | -0.12 | 2.35 | 3.11 | 6.26 | 4.34 | |
| UBS International Bond | -0.19 | 1.53 | 0.95 | 4.26 | 2.88 | |
| Vanguard International Credit Securities Index (Hedged) | -0.37 | 1.77 | 1.88 | 4.99 | 3.48 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.28 | 1.58 | -0.46 | 3.75 | 2.35 |