Conditions in March proved to be not quite as challenging for Australian investors in global bonds as February had been but they were still rough. Longer-term US Treasury bond yields finished the month significantly higher again while 10-year sovereign yields in major euro-zone fell modestly and UK yields rose a touch. The Aussie dollar was stronger against the USD and sterling but stronger against the euro and yen. 15 of the 38 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 March was -0.17% (February: -1.68%) while the median return over the 12 months including March came to 4.79% (February: 0.09%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.56% in March and +1.53% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield gained 4bps to 0.16% over the month, the 10-year yield jumped another 30bps to 1.74% while the 30-year yield finished 27bps higher at 2.41%. BBB spreads remained unchanged at the end of the month.
In other major bond markets, the German 10-year bund yield finished 3bps lower at -0.29%, the French 10-year OAT yield lost 4bps to -0.05% while the 10-year UK gilt yield finished the month 2bps higher at 0.84%.
The best performing global fund for the month in the YieldReport March survey was the Invesco Wholesale Senior Secured Income fund. It produced a return of +0.66% for the month following a top-3 return of +0.83% in February and the best sector performance of 1.93% in January.
The second-highest return was produced by the Bentham Wholesale High Yield fund. Its return of +0.46% followed a top-quartile return of +0.07% in February and a top-quartile performance of 0.56% in January.
In terms of fund performance for the twelve months to the end of March, the Invesco Wholesale Senior Secured Income took over from the T. Rowe Price Dynamic Global Bond Fund as the highest performing fund. The Invesco fund produced a 12-month return of 23.72%, with the Bentham Wholesale High Yield fund in second place with a return of 20.80%.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.32 | -2.70 | 4.07 | 2.54 | 2.12 | |
| Alpha Diversified Income | mFund | 0.41 | -1.55 | 1.56 | 1.69 | 1.91 |
| AMP Future Directions International Bond Fund | -0.73 | -3.57 | 1.16 | 2.77 | 2.30 | |
| AMP Capital International Bond | -0.68 | -3.43 | 1.71 | 3.30 | 2.84 | |
| ANZ-CFS Global Credit Income EF | 0.05 | 0.60 | 6.09 | 0.33 | 1.46 | |
| Ardea Real Outcome Fund | 0.38 | 0.64 | 5.18 | 5.75 | 5.56 | |
| Bentham Professional Global Income | mFund | 1.40 | 3.30 | 20.06 | 3.86 | 6.23 |
| Bentham Wholesale High Yield | mFund | 0.46 | 1.09 | 20.80 | 4.56 | 6.72 |
| Bentham Syndicated Loan ASX Class | mFund | 0.35 | 1.98 | 20.68 | 2.40 | 5.11 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.11 | -0.16 | 2.82 | 2.05 | 2.51 |
| BlackRock Wholesale International Bond | -0.14 | -2.26 | 5.98 | 4.10 | 3.50 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | 0.23 | -3.78 | -3.01 | 3.06 | 2.39 | |
| CFS Wholesale Global Corporate Bond | -0.91 | -4.04 | 7.34 | 5.20 | 4.88 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.04 | -0.06 | 1.39 | 2.12 | 1.93 | |
| Dimensional Global Bond Trust | -0.43 | -3.81 | 3.71 | 4.39 | 3.70 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.01 | 0.03 | 1.45 | 1.75 | 1.67 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -0.56 | -3.85 | 3.09 | 3.36 | 2.41 | |
| Franklin Templeton Multisector Bond (Institutional) | -0.51 | -2.37 | -1.72 | -4.62 | -0.40 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.66 | 3.46 | 23.72 | 3.09 | 4.84 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 0.17 | -1.15 | 16.39 | 3.00 | 3.85 |
| Legg Mason Western Asset Global Bond Fund | -0.53 | -3.21 | 5.80 | 3.82 | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -3.33 | -9.24 | 11.08 | 1.76 | n/a | |
| Macquarie Global Income Opportunities Fund | 0.24 | -0.93 | 7.69 | 3.01 | 3.60 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 1.31 | -3.23 | 3.29 | 5.04 | 4.62 | |
| Mercer Global Credit Fund | -0.73 | -3.17 | 9.64 | 4.48 | 4.00 | |
| Mercer Global Sovereign Bond Fund | -0.27 | -3.41 | 1.06 | 4.02 | 3.81 | |
| Omega Global Corporate Bond | -1.01 | -3.80 | 4.41 | 3.61 | 3.18 | |
| PIMCO Global Bond (Wholesale) | mFund | -0.24 | -1.93 | 6.77 | 4.18 | 4.31 |
| PIMCO Global Credi (Wholesale) | mFund | -0.52 | -2.07 | 6.89 | 3.99 | 3.81 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.22 | -2.67 | 3.24 | 3.95 | 3.84 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -0.05 | 0.55 | 11.32 | 3.37 | 4.49 |
| State Street SSgA Global Fixed Income Trust | -0.26 | -3.09 | -1.57 | 3.48 | 2.80 | |
| T.Rowe Price Dynamic Global Bond Fund | 1.37 | 2.63 | 8.50 | 3.65 | 3.17 | |
| Templeton Global Bond Plus (Wholesale) | -0.49 | 0.50 | -0.28 | -1.67 | 0.61 | |
| UBS Global Credit Fund | -0.80 | -3.57 | 9.54 | 5.09 | 4.81 | |
| UBS International Bond | -0.20 | -2.50 | 2.66 | 3.66 | 3.22 | |
| Vanguard International Credit Securities Index (Hedged) | -0.68 | -3.23 | 6.93 | 4.23 | 3.89 | |
| Vanguard International Fixed Interest Index (Hedged) | -0.15 | -2.90 | -1.21 | 3.19 | 2.66 |
*End of Feb 2021. Returns in AUD after fees.