Global fixed interest June performance
The median 1 month performance in the YieldReport survey of global bond funds was -0.06% (previously +0.60%) and the median return over the last 12 months was 2.51% (previously 3.21%). Unlike May, June was a tough month for long-only fixed-rate funds. Although international bonds issued in the major currencies typically fared better than their Australian counterparts, the Aussie dollar was stronger against all other major currencies. Accordingly 18 of 45 funds in the YieldReport survey finished the month with a positive return.
Bond yields stagnated in the first half of June as the ECB held its official rate steady and markets waited for the June FOMC meeting to confirm a well-flagged rate increase. May U.S. CPI and retail sales figures sent yields lower before they partially rebounded once Janet Yellen said soft inflation data was likely to be temporary. Towards the end of the month ECB chief Mario Draghi sent yields higher around the world after he made a speech in Portugal regarding future ECB policy responses to higher European growth rates. The BoE’s Mark Carney and the BoC’s Stephen Poloz added fuel to the fire and European and U.S. bond yields were jerked up.
By the end of the month 10 year bond yields were consistently higher in all the major markets, except in Japan where they are anchored close to zero and in Italy because….well, just because. The yield on U.S. 10 year bonds added 9bps to 2.30%, French yields rose the same amount to 0.82%, German yields increased by 16bps to 0.46% and in the U.K. yields jumped 21bps to 1.26%. Italian yields fell 3bps to 2.15%
The best performing global fund for June in the YieldReport survey was once again the Legg Mason Western Asset Macro Opportunities Bond Fund. Its return of 2.97% follows exceptionally strong May and April performance. The second-highest return was produced by Legg Mason Brandywine Global Opportunistic fund which returned 1.57%.
Over the twelve months to June 2017, the Bentham Wholesale High Yield fund retained its top spot with a return of 14.39%. The fund has slightly decreased its holdings of high yield bonds from around 95% at the end of May to just over 92% at the end of June. The balance of the portfolio was invested in cash and derivatives.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.31 | 0.96 | 0.16 | 2.54 | 3.84 | |
| Alpha Diversified Income | mFund | -0.35 | 0.57 | 1.69 | 2.89 | 2.93 |
| AMP Future Directions International Bond Fund | -0.29 | 1.14 | 0.22 | 3.38 | 4.34 | |
| AMP Capital International Bond | -0.24 | 1.27 | 0.73 | 3.91 | 4.90 | |
| ANZ-CFS Global Credit Income EF | 0.25 | 0.79 | 5.67 | 2.39 | 4.33 | |
| Bentham Professional Global Income | mFund | 0.71 | 2.03 | 13.12 | 4.78 | 8.69 |
| Bentham Wholesale High Yield | mFund | 0.53 | 2.86 | 14.39 | 6.62 | 9.17 |
| Bentham Syndicated Loan ASX Class | mFund | -0.01 | 1.63 | 10.67 | 5.70 | 7.65 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.15 | 0.66 | 3.09 | 3.10 | 4.15 |
| BlackRock Monthly Income | 0.51 | 1.26 | 7.02 | 3.44 | 7.44 | |
| BlackRock Wholesale International Bond | -0.06 | 1.29 | 1.36 | 4.76 | 5.69 | |
| BT Global Fixed Interest Wholesale | -0.45 | 0.85 | -2.37 | 4.53 | 4.65 | |
| BT Institutional Enhanced Global Fixed Interest | -0.43 | 0.92 | -2.20 | 4.72 | 4.83 | |
| CFS Wholesale Global Bond | -0.32 | 0.83 | -1.67 | 3.96 | 4.56 | |
| CFS Wholesale Global Corporate Bond | 0.18 | 1.99 | 3.97 | 5.22 | 6.97 | |
| DDH Global Fixed Interest Alpha | 1.15 | 1.16 | 4.90 | -0.05 | 2.73 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.19 | 0.79 | 1.21 | 3.85 | 4.11 | |
| Dimensional Global Bond Trust | -0.76 | 0.86 | 0.95 | 5.36 | ||
| Dimensional Two-Year Diversified Fixed Interest | -0.02 | 0.52 | 1.90 | 2.53 | 2.86 | |
| Fidelity Global Strategic Bond | 0.06 | -0.44 | 4.63 | |||
| Franklin Templeton Global Aggregate Bd W | -0.37 | 1.52 | -2.00 | 4.15 | ||
| Franklin Templeton Multisector Bond I | 0.72 | -0.37 | 11.75 | 2.10 | 6.42 | |
| GAM Absolute Return Bond (AU) | 0.87 | 1.76 | 8.55 | 3.09 | 4.04 | |
| Invesco Wholesale Senior Secured Income | mFund | -0.03 | 0.83 | 8.27 | 4.84 | 4.22 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 1.57 | 2.50 | 6.46 | 5.76 | 7.60 |
| Legg Mason Brandywine Global Fixed Income A | 1.56 | 2.23 | 5.58 | 5.43 | 6.96 | |
| Legg Mason Western Asset Global Bond Fund | 0.80 | 3.13 | ||||
| Legg Mason Western Asset Macro Opportunities Bond Fund | 2.97 | 5.75 | ||||
| Macquarie Global Bond | -0.34 | 0.75 | 0.65 | 4.69 | 4.72 | |
| Macquarie Global Income Opportunities Fd | 0.31 | 1.48 | 5.25 | 2.97 | 4.19 | |
| Mercer Global Credit Fund | 0.00 | 1.81 | 2.56 | 4.96 | 6.39 | |
| Mercer Global Sovereign Bond Fund | -0.14 | 1.46 | 0.57 | 6.22 | 6.06 | |
| Nikko AM International Bond | -0.49 | 0.79 | -0.93 | 4.86 | 5.38 | |
| Omega Global Corporate Bond | 0.02 | 1.58 | 2.06 | 4.36 | 5.11 | |
| PIMCO Global Bond Wholesale | mFund | -0.10 | 1.31 | 3.39 | 5.86 | 6.24 |
| PIMCO Global Credi Wholesale | mFund | -0.22 | 1.64 | 3.15 | 5.25 | 5.83 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -0.49 | 1.12 | 1.95 | 5.00 | 5.25 |
| PIMCO Unconstrained Bond Wholesale | mFund | -0.16 | 0.64 | 7.72 | 3.45 | N/A |
| State Street SSgA Global Fixed Income | -0.33 | 0.90 | -1.40 | 4.10 | 4.70 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.27 | -0.05 | 1.60 | 4.68 | ||
| Templeton Global Bond Plus W | 0.50 | -1.04 | 8.78 | 1.30 | 4.25 | |
| UBS Global Credit Fund | 0.00 | 2.05 | 3.77 | 5.19 | 6.40 | |
| UBS International Bond | -0.18 | 1.27 | 0.32 | 4.76 | 5.17 | |
| Vanguard International Credit Securities Index Hdg | -0.09 | 1.67 | 2.51 | 4.87 | 5.60 | |
| Vanguard International Fixed Interest Index Hdg | -0.30 | 0.83 | -1.28 | 4.96 | 5.17 |
*End of June 2017. Returns in AUD after fees.