Conditions proved to be a little more challenging in May than they had been in April but they still provided room for fund managers to produce reasonable performances. Longer-term US Treasury bond yields finished the month moderately lower, UK yields fell modestly while 10-year sovereign yields in major euro-zone economies increased slightly. The Aussie dollar was stronger against the USD and yen but weaker against the euro and sterling. All 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 May was 0.23% (April: 0.35%) while the median return over the 12 months including May came to 2.47% (April: 3.15%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned 0.21% in May and -0.03% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield lost 2bps to 0.14% over the month, the 10-year yield shed 14bps to 1.58% and the 30-year yield 3bps to 2.26%. BBB spreads tightened a little more.
In other major bond markets, the German 10-year bund yield finished 3bps higher at -0.17%, the French 10-year OAT yield gained 4bps to 0.19% while the 10-year UK gilt yield finished the month 5bps lower at 0.79%.
The best performing global fund for the month in the YieldReport May survey was again the Legg Mason Western Asset Macro Opportunities Bond Fund. It produced a return of +1.42% for the month following a best-in-class return of 3.87% in April and a worst-in-class return of -3.33% in March.
The second-highest return was again produced by the Franklin Templeton Multisector Bond (Institutional) fund. Its return of +1.14% followed a second-highest return of +2.17% in April and a third-quartile return of -0.51% in March.
In terms of fund performance for the twelve months to the end of May, the Invesco Wholesale Senior Secured Income retained its title as the highest performing fund. The Invesco fund produced a 12-month return of 16.76%, with the Bentham Professional Syndicated Loan fund again in second place with a return of 14.47%.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | 0.16 | 0.15 | 0.99 | 2.94 | 2.14 | |
| Alpha Diversified Income | mFund | 0.34 | 1.12 | 1.32 | 2.02 | 1.76 |
| AMP Future Directions International Bond Fund | 0.16 | -0.24 | -1.06 | 3.02 | 2.32 | |
| AMP Capital International Bond | 0.20 | -0.11 | -0.52 | 3.55 | 2.85 | |
| ANZ-CFS Global Credit Income EF | 0.02 | 0.27 | 3.95 | 0.38 | 1.33 | |
| Ardea Real Outcome Fund | 0.14 | 0.65 | 4.51 | 5.57 | 5.44 | |
| Bentham Professional Global Income | mFund | 0.05 | 1.33 | 12.91 | 3.82 | 5.56 |
| Bentham Wholesale High Yield | mFund | 0.33 | 1.65 | 13.95 | 4.87 | 6.24 |
| Bentham Syndicated Loan ASX Class | mFund | 0.69 | 1.66 | 14.47 | 2.61 | 4.70 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.07 | 0.07 | 2.39 | 2.00 | 2.37 |
| BlackRock Wholesale International Bond | 0.19 | 0.22 | 3.27 | 4.38 | 3.39 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | 0.13 | 0.54 | -3.11 | 3.19 | 2.25 | |
| CFS Wholesale Global Corporate Bond | 0.49 | 0.26 | 2.54 | 5.71 | 4.75 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.16 | 0.29 | 0.86 | 2.04 | 1.91 | |
| Dimensional Global Bond Trust | 0.44 | 0.37 | 0.87 | 4.52 | 3.69 | |
| Dimensional Two-Year Diversified Fixed Interest | 0.02 | 0.05 | 0.61 | 1.65 | 1.60 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | 0.28 | 0.17 | 1.03 | 4.36 | 2.36 | |
| Franklin Templeton Multisector Bond (Institutional) | 1.14 | 2.12 | 1.89 | -2.81 | 0.08 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.95 | 2.21 | 16.76 | 3.37 | 4.50 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 1.09 | 1.71 | 10.07 | 4.59 | 4.41 |
| Legg Mason Western Asset Global Bond Fund | 0.65 | 0.84 | 3.34 | 4.67 | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 1.42 | 1.83 | 6.68 | 5.23 | n/a | |
| Macquarie Global Income Opportunities Fund | 0.13 | 0.84 | 4.85 | 3.26 | 3.43 | |
| Macquarie Core Australian Fixed Interest Plus Fund | 0.23 | 1.93 | 1.21 | 5.35 | 4.22 | |
| Mercer Global Credit Fund | 0.46 | 0.48 | 3.97 | 4.99 | 3.95 | |
| Mercer Global Sovereign Bond Fund | 0.24 | 0.18 | -0.39 | 4.52 | 3.72 | |
| Omega Global Corporate Bond | 0.29 | -0.41 | 0.82 | 3.78 | 3.07 | |
| PIMCO Global Bond (Wholesale) | mFund | 0.21 | 0.29 | 4.01 | 4.40 | 4.17 |
| PIMCO Global Credi (Wholesale) | mFund | 0.42 | 0.66 | 4.28 | 4.44 | 3.78 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.23 | 0.98 | 1.99 | 4.22 | 3.69 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | 0.21 | 0.45 | 7.48 | 3.37 | 4.06 |
| State Street SSgA Global Fixed Income Trust | 0.12 | -0.13 | -1.92 | 3.61 | 2.69 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.04 | 1.59 | 5.88 | 4.14 | 3.08 | |
| Templeton Global Bond Plus (Wholesale) | n/a | -0.49 | 0.16 | -1.07 | 0.80 | |
| UBS Global Credit Fund | 0.51 | 0.67 | 4.19 | 5.75 | 4.74 | |
| UBS International Bond | 0.34 | 0.49 | 1.09 | 3.89 | 3.13 | |
| Vanguard International Credit Securities Index (Hedged) | 0.56 | 0.41 | 2.85 | 4.63 | 3.85 | |
| Vanguard International Fixed Interest Index (Hedged) | 0.17 | -0.03 | -2.04 | 3.28 | 2.53 |
*End of May 2021. Returns in AUD after fees.