The median 1 month performance in the YieldReport survey of global bond funds was 0.08% (previously 0.14%) while the median return over the last 12 months was 1.05% (previously 0.98%).
After a reprieve from tough conditions in May, June marked a return to a more challenging environment for bond fund managers. Yields fell in some markets, increased in others and, in some cases, rose at the front of the curve while falling at the back. Fortunately for unhedged funds, the Aussie weakened against all major currencies, which led to currency translation gains. 24 of 43 funds in the YieldReport survey produced positive returns for the month, which, coincidentally, is the same ratio as in May.
In US markets, 2 year bonds increased by 9bps to 2.52%, 10 year yields added 1bp to 2.87% but 30 year bonds fell lost 3bps to 2.99%. In European markets, German 10 year bunds fell by 4bps to 0.30%, UK gilts rose by 5bps to 1.28%, French 10 year yields remained unchanged at 0.67%. Italian 10 year bond yields returned to a sort of normality after a dramatic May and decreased by 5bps to 2.67%.
(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 survey was the Mercer Global Sovereign Bond Fund. Its return of +1.18% follows on from a bottom-quintile performance in May (-0.83%) and a median performance in April (-0.15%). The second-highest return of 0.79% was produced by the Pendal (formerly BT) Enhanced Global Fixed Interest (Wholesale) fund.
In terms of fund performance for the twelve months to June 2018, the Bentham Professional Global Income retained its position as the top-performing fund in the survey. Its top-quintile June return was not enough for it to maintain its May 12 month return but the fund’s return of 5.41% was still enough for it to end the financial year on top.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.02 | -0.67 | 0.28 | 1.54 | 2.84 | |
| Alpha Diversified Income | mFund | 0.14 | -0.14 | 0.65 | 2.03 | 2.86 |
| AMP Future Directions International Bond Fund | 0.04 | -0.20 | 0.61 | 2.24 | 3.48 | |
| AMP Capital International Bond | 0.08 | -0.08 | 1.14 | 2.77 | 4.02 | |
| ANZ-CFS Global Credit Income EF | -0.16 | 0.10 | 1.76 | 2.62 | 3.17 | |
| Bentham Professional Global Income | mFund | 0.26 | 0.32 | 5.41 | 5.48 | 6.03 |
| Bentham Wholesale High Yield | mFund | 0.18 | 0.48 | 2.17 | 5.99 | 6.87 |
| Bentham Syndicated Loan ASX Class | mFund | 0.15 | 0.78 | 5.08 | 5.69 | 6.22 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.16 | 0.48 | 2.69 | 2.84 | 3.43 |
| BlackRock Monthly Income | -0.31 | -0.61 | 2.03 | 3.25 | 4.46 | |
| BlackRock Wholesale International Bond | 0.16 | -0.28 | 1.11 | 3.53 | 4.85 | |
| BT Global Fixed Interest Wholesale | 0.72 | 0.60 | 1.85 | 2.93 | 4.36 | |
| BT Institutional Enhanced Global Fixed Interest | 0.79 | 0.71 | 2.05 | 3.12 | 4.56 | |
| CFS Wholesale Global Bond | -0.10 | -0.53 | -0.05 | 2.36 | 3.59 | |
| CFS Wholesale Global Corporate Bond | -0.43 | -0.72 | 0.27 | 3.93 | 5.50 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.10 | 0.59 | 0.98 | 2.73 | 3.53 | |
| Dimensional Global Bond Trust | 0.13 | 0.56 | 1.88 | 4.05 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.09 | 0.43 | 0.85 | 1.87 | 2.32 | |
| Franklin Templeton Global Aggregate Bd W | 0.25 | -1.91 | -0.58 | 1.66 | ||
| Franklin Templeton Multisector Bond I | -1.23 | -4.16 | -2.88 | 1.13 | 2.61 | |
| GAM Absolute Return Bond (AU) | -0.29 | -0.32 | 0.74 | 3.53 | 2.97 | |
| Invesco Wholesale Senior Secured Income | mFund | -0.11 | 0.60 | 4.27 | 4.94 | 4.34 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -0.45 | -3.48 | -0.98 | 2.98 | 4.64 |
| Legg Mason Brandywine Global Fixed Income A | -0.21 | -2.65 | 0.68 | 2.70 | 4.59 | |
| Legg Mason Western Asset Global Bond Fund | -0.06 | -1.14 | 0.13 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -1.24 | -5.92 | -2.98 | n/a | n/a | |
| Macquarie Global Bond | 0.38 | -0.53 | 0.68 | 2.52 | 4.01 | |
| Macquarie Global Income Opportunities Fd | -0.12 | -0.23 | 1.61 | 2.70 | 3.11 | |
| Mercer Global Credit Fund | -0.29 | -0.53 | 0.31 | 3.57 | 5.09 | |
| Mercer Global Sovereign Bond Fund | 1.18 | 0.18 | 3.40 | 4.72 | 5.70 | |
| Nikko AM International Bond | 0.25 | -0.01 | 1.19 | 3.45 | 4.65 | |
| Omega Global Corporate Bond | -0.28 | -0.17 | 0.32 | 3.15 | 4.22 | |
| PIMCO Global Bond Wholesale | mFund | 0.19 | 0.08 | 2.34 | 4.66 | 5.69 |
| PIMCO Global Credi Wholesale | mFund | 0.00 | -0.13 | 1.05 | 3.91 | 4.95 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.29 | 0.27 | 2.52 | 3.98 | 4.92 |
| PIMCO Unconstrained Bond Wholesale | mFund | -0.21 | 0.30 | 2.64 | 3.37 | N/A |
| State Street SSgA Global Fixed Income | 0.38 | 0.12 | 2.11 | 3.61 | 4.29 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.31 | -0.89 | 0.63 | 3.26 | ||
| Templeton Global Bond Plus W | -0.75 | -2.54 | -1.72 | 0.46 | 2.10 | |
| UBS Global Credit Fund | -0.36 | -0.81 | 0.38 | 3.97 | 5.17 | |
| UBS International Bond | 0.12 | 0.12 | 1.97 | 3.71 | 4.74 | |
| Vanguard International Credit Securities Index Hdg | -0.15 | -0.20 | 1.00 | 3.77 | 4.79 | |
| Vanguard International Fixed Interest Index Hdg | 0.25 | 0.12 | 2.06 | 3.63 | 4.75 |
*End of June 2018. Returns in AUD after fees.