The median 1 month performance in the YieldReport survey of global bond funds was 0.14% (previously -0.42%) while the median return over the last 12 months was 0.98% (previously 1.57%).
May represented a reprieve from the tough conditions experienced by global bond funds in April. Yields fell around the globe, more so in Europe than in the US, although Italian bonds were hammered. Unhedged funds suffered modest losses as the Aussie dollar strengthened a little against major currencies. 24 of 41 funds in the YieldReport survey produced positive returns for the month.
In US markets, 2 year bonds lost 6bps to 2.43%, 10 year yields fell by 9bps to 2.86% and 30 year bonds decreased by 10bps to 3.02%. In European markets, German 10 year bunds dropped by 22bps to 0.34%, UK gilts fell 19bps to 1.23%, French 10 year yields lost 12bps to 0.67%. Italian 10 year bond yields jumped a staggering 94bps t0 2.33%.
(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 Dimensional Global Bond Trust. Its return of +0.85% follows on from a median performance in April (-0.42%) and a good performance in March (+0.83%, although March was a good month for almost all funds).
The second-highest return was shared between the Omega Global Corporate Bond fund and PIMCO’s Unconstrained Bond Wholesale fund. Both funds returned +0.59%.
In terms of fund performance for the twelve months to May 2018, the Bentham Professional Global Income retained its position as the top-performing fund in the survey. Despite losing 0.77% during May, the fund returned 5.89% for the 12 month period, although its latest figures are noticeably lower than its comparable figures in April (+7.47%).
At the end of May, this fund had an effective duration of -2.31 years. The fund’s assets were invested in global syndicated loans (42%), bank capital securities (15.7%) with a just under 20% in cash, basis trades and derivatives. About 20% was invested in residential mortgage-backed securities (RMBS), asset-backed securities and collateralised loan obligations (CLOs) with the balance in corporate credit, high yield securities and European convertibles.
Further details are available at Bentham Asset Management.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.15 | -0.22 | -0.05 | 1.08 | 2.33 | |
| Alpha Diversified Income | mFund | -0.41 | 0.07 | 0.17 | 1.77 | 2.57 |
| AMP Future Directions International Bond Fund | 0.24 | 0.46 | 0.29 | 1.86 | 3.09 | |
| AMP Capital International Bond | 0.27 | 0.58 | 0.81 | 2.39 | 3.63 | |
| ANZ-CFS Global Credit Income EF | -0.11 | -0.16 | 2.16 | 2.57 | 2.95 | |
| Bentham Professional Global Income | mFund | -0.77 | -0.51 | 5.89 | 5.40 | 6.04 |
| Bentham Wholesale High Yield | mFund | -0.11 | -0.27 | 2.53 | 5.58 | 6.45 |
| Bentham Syndicated Loan ASX Class | mFund | 0.10 | 0.89 | 4.92 | 5.60 | 6.13 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.14 | 0.22 | 2.67 | 2.73 | 3.30 |
| BlackRock Monthly Income | -0.72 | -1.10 | 2.87 | 3.26 | 4.32 | |
| BlackRock Wholesale International Bond | 0.14 | 0.18 | 0.91 | 3.03 | 4.52 | |
| BT Global Fixed Interest Wholesale | 0.50 | 1.03 | 0.67 | 2.05 | 3.89 | |
| BT Institutional Enhanced Global Fixed Interest | 0.52 | 1.08 | 0.81 | 2.22 | 4.08 | |
| CFS Wholesale Global Bond | -0.02 | -0.30 | -0.27 | 2.04 | 3.50 | |
| CFS Wholesale Global Corporate Bond | 0.34 | -0.18 | 0.89 | 3.61 | 4.97 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.52 | 0.78 | 0.70 | 2.58 | 3.28 | |
| Dimensional Global Bond Trust | 0.85 | 1.26 | 0.98 | 3.57 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.30 | 0.46 | 0.74 | 1.88 | 2.32 | |
| Franklin Templeton Global Aggregate Bd W | -1.40 | -0.77 | -1.19 | 1.09 | ||
| Franklin Templeton Multisector Bond I | -3.47 | -2.16 | -0.96 | 1.10 | 2.38 | |
| GAM Absolute Return Bond (AU) | -0.03 | -0.30 | 1.91 | 3.79 | 2.71 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.16 | 0.93 | 4.34 | 4.77 | 4.35 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -2.29 | -2.15 | 1.02 | 2.27 | 4.27 |
| Legg Mason Brandywine Global Fixed Income A | -1.54 | -1.53 | 2.46 | 1.97 | 4.28 | |
| Legg Mason Western Asset Global Bond Fund | -0.10 | -0.06 | 0.99 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -2.67 | -3.62 | 1.16 | n/a | n/a | |
| Macquarie Global Bond | -0.43 | 0.28 | -0.04 | 1.81 | 3.74 | |
| Macquarie Global Income Opportunities Fd | -0.07 | -0.08 | 2.04 | 2.71 | 3.00 | |
| Mercer Global Credit Fund | 0.21 | -0.04 | 0.60 | 3.23 | 4.56 | |
| Mercer Global Sovereign Bond Fund | -0.83 | 0.56 | 2.05 | 3.82 | 5.25 | |
| Nikko AM International Bond | 0.23 | 0.91 | 0.45 | 2.95 | 4.40 | |
| Omega Global Corporate Bond | 0.59 | 0.19 | 0.63 | 2.89 | 3.49 | |
| PIMCO Global Bond Wholesale | mFund | 0.29 | 0.71 | 2.05 | 4.16 | 5.20 |
| PIMCO Global Credi Wholesale | mFund | 0.34 | 0.37 | 0.83 | 3.44 | 4.53 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.40 | 0.76 | 1.73 | 3.47 | 4.48 |
| PIMCO Unconstrained Bond Wholesale | mFund | 0.59 | 0.58 | 2.69 | 3.38 | n/a |
| State Street SSgA Global Fixed Income | 0.22 | 0.97 | 1.39 | 3.10 | 4.02 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.98 | -1.71 | 0.05 | 3.19 | ||
| Templeton Global Bond Plus W | -2.49 | -1.19 | -0.49 | 0.25 | 1.58 | |
| UBS Global Credit Fund | 0.08 | -0.37 | 0.74 | 3.53 | 4.67 | |
| UBS International Bond | 0.46 | 0.72 | 1.67 | 3.25 | 4.37 | |
| Vanguard International Credit Securities Index Hdg | 0.40 | 0.32 | 1.06 | 3.36 | 4.39 | |
| Vanguard International Fixed Interest Index Hdg | 0.27 | 1.08 | 1.51 | 3.19 | 4.51 |
*End of May 2018. Returns in AUD after fees.