Conditions proved to be more favourable for fund managers in June than they had been in May, although some managers did struggle. Longer-term US Treasury bond yields finished the month moderately lower, as did yields in the UK and major euro-zone economies. The Aussie dollar was weaker against the USD, the yen, euro and sterling. 33 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 June was 0.52% (May: 0.23%) while the median return over the 12 months including June came to 1.90% (May: 2.47%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned 0.58% in June and -0.10% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield gained 11bps to 0.25% over the month, the 10-year yield shed 13bps to 1.47% and the 30-year yield dropped 17bps to 2.09%. BBB spreads tightened a little more, again.
In other major bond markets, the German 10-year bund yield lost 4bps to -0.21%, the French 10-year OAT yield shed 6bps to 0.13% while the 10-year UK gilt yield finished the month 7bps lower at 0.72%.
The best performing global fund for the month in the YieldReport June survey was, for a third consecutive month, the Legg Mason Western Asset Macro Opportunities Bond Fund. It produced a return of +2.94% for the month following best-in-class returns of 1.42% in May and 3.87% in April.
The second-highest return was produced by the UBS Global Credit Fund. Its return of +1.22% followed a top-quartile return of 0.51% in May and the third-highest return of +0.96% in April.
In terms of fund performance for the twelve months to the end of June, the Invesco Wholesale Senior Secured Income retained its title as the highest performing fund for a fourth consecutive month. The Invesco fund produced a 12-month return of 14.75%, with the Bentham Wholesale High Yield fund displacing its sibling fund from second place with a return of 13.54%.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.37 | 0.84 | 0.81 | 3.06 | 1.91 | |
| Alpha Diversified Income | mFund | 0.74 | 1.76 | 0.92 | 2.22 | 1.80 |
| AMP Future Directions International Bond Fund | 0.55 | 1.05 | -1.06 | 3.20 | 2.08 | |
| AMP Capital International Bond | 0.61 | 1.18 | -0.53 | 3.74 | 2.61 | |
| ANZ-CFS Global Credit Income EF | 0.51 | 0.73 | 3.56 | 0.67 | 1.47 | |
| Ardea Real Outcome Fund | -0.55 | -0.27 | 3.03 | 5.37 | 5.24 | |
| Bentham Professional Global Income | mFund | 0.05 | -0.02 | 11.49 | 3.75 | 5.90 |
| Bentham Wholesale High Yield | mFund | 0.94 | 2.14 | 13.54 | 5.13 | 6.31 |
| Bentham Syndicated Loan ASX Class | mFund | 0.17 | 1.47 | 12.53 | 2.62 | 4.71 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.01 | 0.17 | 1.90 | 1.95 | 2.32 |
| BlackRock Wholesale International Bond | 0.52 | 0.88 | 2.12 | 4.55 | 3.19 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | 0.27 | 0.58 | -2.84 | 3.04 | 1.76 | |
| CFS Wholesale Global Corporate Bond | 1.18 | 2.37 | 1.90 | 6.29 | 4.59 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.13 | 0.12 | 0.50 | 1.96 | 1.61 | |
| Dimensional Global Bond Trust | 1.06 | 2.09 | 0.84 | 4.84 | 3.46 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.00 | 0.05 | 0.44 | 1.62 | 1.52 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 0.62 | 1.36 | 1.00 | 4.49 | 2.14 | |
| Franklin Templeton Multisector Bond (Institutional) | -1.32 | 1.97 | 0.11 | -2.84 | -0.09 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.61 | 2.16 | 14.75 | 3.61 | 4.66 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 0.74 | 2.29 | 9.92 | 5.01 | 4.07 |
| Legg Mason Western Asset Global Bond Fund | 0.49 | 1.88 | 3.02 | 4.86 | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 2.94 | 8.44 | 8.14 | 6.69 | n/a | |
| Macquarie Global Income Opportunities Fund | 0.43 | 1.03 | 3.88 | 3.45 | 3.50 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 1.17 | 2.30 | 1.10 | 5.61 | 4.23 | |
| Mercer Global Credit Fund | 1.05 | 2.28 | 3.31 | 5.45 | 3.83 | |
| Mercer Global Sovereign Bond Fund | 0.60 | 1.05 | -0.14 | 4.32 | 3.38 | |
| Omega Global Corporate Bond | 0.97 | 1.58 | 0.98 | 4.21 | 2.99 | |
| PIMCO Global Bond (Wholesale) | mFund | 0.24 | 0.78 | 3.19 | 4.42 | 3.80 |
| PIMCO Global Credi (Wholesale) | mFund | 0.56 | 1.75 | 3.49 | 4.64 | 3.61 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.41 | 1.17 | 1.61 | 4.26 | 3.45 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -0.21 | 0.30 | 5.46 | 3.37 | 4.07 |
| State Street SSgA Global Fixed Income Trust | 0.54 | 0.67 | -1.69 | 3.67 | 2.32 | |
| T.Rowe Price Dynamic Global Bond Fund | -1.08 | -0.86 | 4.69 | 3.65 | 2.63 | |
| UBS Global Credit Fund | 1.22 | 2.71 | 3.89 | 6.31 | 4.59 | |
| UBS International Bond | 0.52 | 1.21 | 0.57 | 4.03 | 2.86 | |
| Vanguard International Credit Securities Index (Hedged) | 0.79 | 1.90 | 2.23 | 4.95 | 3.66 | |
| Vanguard International Fixed Interest Index (Hedged) | 0.48 | 0.60 | -1.73 | 3.36 | 2.15 |
*End of June 2021. Returns in AUD after fees.