Global bond fund managers, like their Australian counterparts, faced bond-friendly conditions in November. Bond yields fell in all the advanced economies, especially in the US. However, the Aussie dollar increased against all of the major currencies. Of the 39 funds in the YieldReport survey, 24 finished the month with positive returns.
The median 1 month performance in the YieldReport survey of global bond funds was +0.12% (previously -0.30%) while the median return over the previous 12 months was -0.28% (October: -0.24%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned 0.44% in November but only 0.32% over the previous 12 months when calculated in Australian dollars.
In US markets, 2-year Treasury bond yields fell by 10bps to 2.78%, 10-year yields lost 15bps to 2.99% and 30-year yields shed 9bps to 3.29%. In other advanced-economy markets, German 10-year bund yields lost 7bps to 0.31%, French 10-year yields shed 7bps to 0.68% and UK 10-year yields fell by 8bps to 1.22%. Italian 10-year yields gave back a good portion of October’s 29bps increase and fell by 22bps to 3.21% after the Italian Government gave ground to the EU on the Italian 2019 budget.
(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 November survey was the Legg Mason Western Asset Macro Opportunities Bond Fund. Its return of +1.00% follows a near worst-in-class performance in October (-2.25%) and a solid performance in September (+0.62%).
The second-highest return for November was produced by the Legg Mason Brandywine Global Opportunistic Fixed Income (A) fund. Its return of 0.77% for the month came after an October performance similar to the above-mentioned LMWA Macro Opportunities fund.
In terms of fund performance for the twelve months to November 2018, the Bentham Professional Syndicated Loan fund pushed its sibling Bentham fund out of its position after six consecutive months as the top-performing fund in the survey. Its 12-month return of 3.07% was the highest in the survey after the Bentham Professional Global Income fund produced a negative performance for the month and its 12-month return dropped to 2.72%.
The second-highest return of 2.99% was produced by the Invesco Wholesale Senior Secured Income fund. This fund had the second-highest 12-month return in October. As noted last month, the fund invests into Invesco’s Zodiac fund which in turn invests in senior secured loans. As with the Bentham funds, it is available as an “mfund” on the ASX.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.18 | -1.18 | -2.00 | 0.77 | 2.25 | |
| Alpha Diversified Income | mFund | -0.84 | -0.38 | 0.33 | 1.96 | 2.68 |
| AMP Future Directions International Bond Fund | 0.09 | -0.74 | -0.96 | 1.75 | 3.07 | |
| AMP Capital International Bond | 0.13 | -0.62 | -0.45 | 2.27 | 3.60 | |
| ANZ-CFS Global Credit Income EF | -0.70 | -0.61 | 0.26 | 3.02 | 2.55 | |
| Bentham Professional Global Income | mFund | -1.02 | -0.09 | 2.72 | 6.04 | 5.16 |
| Bentham Wholesale High Yield | mFund | -0.61 | -1.59 | -0.61 | 6.78 | 5.65 |
| Bentham Syndicated Loan ASX Class | mFund | -0.86 | -0.26 | 3.07 | 6.47 | 5.57 |
| Kapstream Wholesale Absolute Return Income | mFund | -0.04 | 0.35 | 2.09 | 2.86 | 3.17 |
| BlackRock Wholesale International Bond | 0.31 | -0.38 | -0.75 | 2.45 | 4.09 | |
| BT Global Fixed Interest Wholesale | 0.35 | -0.71 | -0.43 | 1.44 | 3.67 | |
| BT Institutional Enhanced Global Fixed Interest | 0.36 | -0.68 | -0.28 | 1.61 | 3.85 | |
| CFS Wholesale Global Bond | 0.12 | -0.57 | -1.36 | 1.41 | 3.04 | |
| CFS Wholesale Global Corporate Bond | -0.27 | -1.64 | -2.18 | 3.42 | 4.47 | |
| Dimensional Five-Year Diversified Fixed Interest | 0.34 | 0.33 | 1.02 | 2.43 | 3.15 | |
| Dimensional Global Bond Trust | 0.25 | -0.29 | 0.60 | 3.37 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.22 | 0.32 | 1.14 | 1.79 | 2.16 | |
| Franklin Templeton Global Aggregate Bd W | 0.35 | -1.18 | -1.41 | 0.38 | ||
| Franklin Templeton Multisector Bond I | 0.51 | 4.72 | -1.13 | 2.45 | 2.31 | |
| Invesco Wholesale Senior Secured Income | mFund | -1.05 | -0.54 | 2.96 | 5.80 | 4.27 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 0.77 | -0.46 | -2.89 | 2.65 | 4.46 |
| Legg Mason Brandywine Global Fixed Income A | 0.39 | -0.69 | -1.19 | 2.67 | 4.61 | |
| Legg Mason Western Asset Global Bond Fund | 0.56 | -0.91 | -2.16 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 1.00 | -0.66 | -7.97 | n/a | n/a | |
| Macquarie Global Income Opportunities Fd | -0.36 | -0.51 | 0.11 | 3.03 | 2.81 | |
| Mercer Global Credit Fund | -0.19 | -1.12 | -1.70 | 2.83 | 4.25 | |
| Mercer Global Sovereign Bond Fund | 0.27 | 0.00 | 0.84 | 3.30 | 5.20 | |
| Omega Global Corporate Bond | 0.05 | -1.09 | -1.48 | 2.51 | 3.62 | |
| PIMCO Global Bond Wholesale | mFund | 0.08 | -0.49 | 0.06 | 3.84 | 5.09 |
| PIMCO Global Credi Wholesale | mFund | 0.19 | -0.66 | -0.51 | 3.23 | 4.44 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | 0.06 | -0.21 | 0.86 | 3.44 | 4.66 |
| PIMCO Unconstrained Bond Wholesale | mFund | -0.28 | 0.10 | 1.16 | 4.26 | N/A |
| State Street SSgA Global Fixed Income | 0.66 | 0.12 | 0.62 | 2.57 | 3.75 | |
| T.Rowe Price Dynamic Global Bond Fund | -0.21 | 0.88 | 0.18 | 2.13 | ||
| Templeton Global Bond Plus W | 0.62 | 4.20 | 0.72 | 1.92 | 2.11 | |
| UBS Global Credit Fund | -0.73 | -1.88 | -2.39 | 3.26 | 4.25 | |
| UBS International Bond | 0.23 | -0.45 | 0.06 | 2.87 | 4.21 | |
| Vanguard International Credit Securities Index Hdg | -0.06 | -0.97 | -0.92 | 3.12 | 4.20 | |
| Vanguard International Fixed Interest Index Hdg | 0.68 | 0.29 | 1.03 | 2.73 | 4.32 |
*End of November 2018. Returns in AUD after fees.