The median 1 month performance in the YieldReport survey of global bond funds was +0.47% (previously -0.30%) while the median return over the last 12 months was 2.84% (previously 2.50%).
After a couple of tough months, March turned out to be a more favourable month for global bond funds. Yields generally fell in every major market and the Aussie dollar weakened against all of the major currencies. 36 of 43 funds in the YieldReport survey produced positive returns for the month.
Yields in advanced-economy bond markets finished March noticeably lower with the exception of yields at the front of the U.S. curve. U.S. 2 year bond yields increased by 2bps to 2.26% but 10 year bond yields fell by 12bps to 2.74% and U.S. 30 year bonds lost 16bps to 2.97%. In European markets, German 10 year bond yields lost 16bps to 0.49%, French 10 year yields decreased by 20bps to 0.72% and U.K 10 year gilts fell by 15bps to 1.35%. Once again, Italian bond yields stayed with the pack and lost 18bps to 1.79%.
The best performing global fund for the month in the YieldReport survey was the Mercer Global Sovereign Bond Fund. Its return of +1.57% follows on from a bottom-quartile performance in the February (-1.00%) and a slightly better than average return in January (-0.17%).
The second-highest return of +1.41% was produced by the Franklin Templeton Global Aggregate Bond fund and the third highest result came from the State Street Global Fixed Income Index Trust (+1.23%).
In terms of fund performance for the twelve months to March 2018, the Legg Mason Western Asset Macro Opportunities Bond Fund produced the highest return for a second month in a row. It returned +9.06% for the period, whereas in February its 12 month return was 9.71%. This fund had an effective duration of 5.9 years (February: 6.4) and the average credit rating of its securities is “A” (previous month: A). Government securities accounted for 46.0% (previous month: 43.9%) of the fund, emerging market securities 23.2% (previous: 22.7%), investment-grade corporate debt 16.9% (14.6%) and cash and “other securities” accounted for 0.4% (5.5%). High yield 8.3% (8.1%) and asset-backed securities 5.2% (5.2%) accounted for the balance.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.47 | -0.08 | 1.91 | 0.99 | 2.53 | |
| Alpha Diversified Income | mFund | 0.27 | 0.29 | 1.30 | 1.88 | 2.68 |
| AMP Future Directions International Bond Fund | 0.70 | -0.42 | 1.97 | 1.75 | 3.28 | |
| AMP Capital International Bond | 0.74 | -0.28 | 2.51 | 2.28 | 3.82 | |
| ANZ-CFS Global Credit Income EF | -0.42 | 0.05 | 2.45 | 2.70 | 3.16 | |
| Bentham Professional Global Income | mFund | -0.57 | 1.38 | 7.22 | 5.89 | 6.64 |
| Bentham Wholesale High Yield | mFund | -0.57 | -1.26 | 4.59 | 6.21 | 6.88 |
| Bentham Syndicated Loan ASX Class | mFund | 0.25 | 1.29 | 5.97 | 6.04 | 6.34 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.09 | 0.55 | 2.87 | 2.71 | 3.43 |
| BlackRock Monthly Income | -0.80 | -0.25 | 3.96 | 3.61 | 5.03 | |
| BlackRock Wholesale International Bond | 0.63 | -0.30 | 2.72 | 2.88 | 4.80 | |
| BT Global Fixed Interest Wholesale | 1.15 | 0.31 | 2.11 | 1.48 | 3.81 | |
| BT Institutional Enhanced Global Fixed Interest | 1.16 | 0.35 | 2.26 | 1.65 | 4.00 | |
| CFS Wholesale Global Bond | 0.14 | -0.81 | 1.32 | 1.74 | 3.58 | |
| CFS Wholesale Global Corporate Bond | 0.11 | -1.35 | 3.01 | 3.61 | 5.15 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.29 | -0.37 | 1.19 | 2.52 | 3.20 | |
| Dimensional Global Bond Trust | 0.83 | -0.58 | 2.19 | 3.25 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.11 | -0.02 | 0.94 | 1.88 | 2.34 | |
| Franklin Templeton Global Aggregate Bd W | 1.41 | 1.22 | 2.89 | 1.20 | ||
| Franklin Templeton Multisector Bond I | 0.84 | 1.79 | 0.97 | 2.56 | 3.10 | |
| GAM Absolute Return Bond (AU) | -0.27 | 0.51 | 2.84 | 4.47 | 2.88 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.20 | 1.28 | 4.49 | 4.99 | 4.33 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 0.92 | 1.91 | 5.15 | 2.82 | 5.41 |
| Legg Mason Brandywine Global Fixed Income A | 0.94 | 2.29 | 5.74 | 2.31 | 5.14 | |
| Legg Mason Western Asset Global Bond Fund | 1.03 | -0.28 | 4.45 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 1.17 | -0.41 | 9.06 | n/a | n/a | |
| Macquarie Global Bond | 1.20 | 0.43 | 1.97 | 1.43 | 3.81 | |
| Macquarie Global Income Opportunities Fd | 0.04 | -0.15 | 3.35 | 2.92 | 3.26 | |
| Mercer Global Credit Fund | 0.20 | -1.34 | 2.67 | 3.16 | 4.76 | |
| Mercer Global Sovereign Bond Fund | 1.57 | 1.62 | 4.71 | 3.64 | 5.54 | |
| Nikko AM International Bond | 1.17 | 0.06 | 2.00 | 2.62 | 4.42 | |
| Omega Global Corporate Bond | 0.08 | -1.29 | 2.08 | 2.86 | 3.40 | |
| PIMCO Global Bond Wholesale | mFund | 0.72 | -0.05 | 3.50 | 3.80 | 5.08 |
| PIMCO Global Credi Wholesale | mFund | 0.50 | -0.82 | 2.84 | 3.42 | 4.64 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.47 | 0.11 | 3.07 | 3.01 | 4.52 |
| PIMCO Unconstrained Bond Wholesale | mFund | 0.07 | 0.20 | 2.99 | 3.57 | N/A |
| State Street SSgA Global Fixed Income | 1.23 | 0.57 | 2.90 | 2.81 | 4.04 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.52 | 0.86 | 1.48 | 4.49 | ||
| Templeton Global Bond Plus W | 0.62 | 1.52 | -0.21 | 1.25 | 1.85 | |
| UBS Global Credit Fund | 0.09 | -1.57 | 3.27 | 3.46 | 4.89 | |
| UBS International Bond | 0.73 | -0.07 | 3.15 | 2.96 | 4.35 | |
| Vanguard International Credit Securities Index Hdg | 0.37 | -1.03 | 2.90 | 3.15 | 4.45 | |
| Vanguard International Fixed Interest Index Hdg | 1.20 | 0.61 | 2.78 | 2.88 | 4.49 |
*End of March 2018. Returns in AUD after fees.