Conditions facing global fund managers in October turned sour. Long-term US Treasury bond yields finished considerably higher after five months of falls yields in major European countries also rose noticeably. However, the Aussie dollar was weaker against all the major currencies with the exception of the yen. Only six of the 26 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 October was -1.86% (September: 0.88%) while the median return over the 12 months including October was 8.01% (September: 8.92%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -1.72% over the month and 8.44% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield gained 54bps to 4.18%, the 10-year yield added 51bps to 4.209% while the 30-year yield finished 36bps higher at 4.48%. BBB corporate spreads tightened modestly again.
In other major bond markets, the German 10-year bund yield gained 27bps to 2.39% while the French 10-year OAT yield finished 21bps higher at 3.14%. The 10-year UK gilt yield finished the month 40bps higher at 4.49%.
The best performing global fund for the month in the YieldReport October survey was the T. Rowe Price Dynamic Global Bond Fund which produced a return of 1.74%. The second-highest return for the month, 0.64%, was produced by the Dimensional Five-Year Diversified Fixed Interest. The Kapstream Wholesale Absolute Return Income Fund ranked third with a return of 0.53%.
In terms of fund performance for the twelve months to the end of October, the Bentham Wholesale High Yield Fund retained the title as highest performing fund. The Bentham fund produced a 12-month return of 13.70% while the Bentham Professional Global Income Fund was next with a return of 11.61%. The UBS Global Credit Fund retained third position after it returned 11.42%.
| FUND NAME | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -1.92 | -0.29 | 8.73 | -2.38 | -1.14 | |
| ANZ-CFS Global Credit Income EF | -0.07 | 0.84 | 6.13 | 2.35 | 1.45 | |
| Ardea Real Outcome Fund | 0.51 | 0.56 | -1.24 | 1.67 | 1.96 | |
| Bentham Professional Global Income | mFund | -2.10 | -0.44 | 11.61 | 3.65 | 4.35 |
| Bentham Wholesale High Yield | mFund | -0.64 | 1.26 | 13.70 | 2.57 | 2.97 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.53 | 1.93 | 7.16 | 3.51 | 2.45 |
| Dimensional Five-Year Diversified Fixed Interest | 0.64 | 1.52 | 6.54 | 3.82 | 3.12 | |
| Dimensional Global Bond Trust | 0.51 | 2.13 | 7.63 | 3.98 | 3.68 | |
| Dimensional Two-Year Diversified Fixed Interest | -1.89 | -0.44 | 7.31 | -0.65 | -0.54 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -1.89 | 0.26 | 7.82 | -1.70 | -0.80 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.12 | 1.32 | 7.35 | 4.09 | 4.42 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -3.80 | -0.76 | 8.20 | -2.95 | -0.91 |
| Macquarie Global Income Opportunities Fund | -2.96 | -0.42 | 7.42 | -3.47 | -1.07 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -0.54 | 1.24 | 8.82 | 1.84 | 1.72 | |
| Mercer Global Credit Fund | -2.39 | -0.11 | 10.61 | -1.47 | -0.93 | |
| Mercer Global Sovereign Bond Fund | -1.76 | 0.50 | 10.92 | -2.71 | -0.52 | |
| PIMCO Global Bond (Wholesale) | mFund | -2.13 | -0.39 | 4.20 | -2.51 | -1.28 |
| PIMCO Global Credi (Wholesale) | mFund | -1.88 | -0.23 | 8.71 | -1.75 | -0.15 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -1.66 | 0.53 | 10.26 | -2.00 | -0.31 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -1.85 | -0.29 | 8.34 | -1.13 | -0.35 |
| State Street SSgA Global Fixed Income Trust | -1.46 | 0.47 | 6.78 | -3.26 | -1.66 | |
| T.Rowe Price Dynamic Global Bond Fund | 1.74 | 1.88 | 2.20 | 0.61 | 2.32 | |
| UBS Global Credit Fund | -1.90 | 0.73 | 11.42 | -2.85 | -0.43 | |
| UBS International Bond | -1.67 | 0.60 | 9.02 | -2.19 | -0.74 | |
| Vanguard International Credit Securities Index (Hedged) | -1.60 | 0.70 | 9.79 | -2.52 | -0.74 | |
| Vanguard International Fixed Interest Index (Hedged) | -1.57 | 0.36 | 6.67 | -2.73 | -1.50 |
*End of October 2024. Return in AUD after fees