Global bond fund managers faced unfavourable conditions in September as bond yields increased around the globe and a higher Aussie dollar. All in all though, they put in an admirable performance as just under half of the funds in the YieldReport survey finished the month with positive returns.
The median 1 month performance in the YieldReport survey of global bond funds was -0.15% (previously 0.18%) while the median return over the last 12 months was 0.52% (previously 0.37%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -0.38% in September and 0.89% over the previous 12 months when calculated in Australian dollars.
In US markets, 2-year Treasury bond yields increased by 18bps to 2.80%, 10-year yields jumped by 20bps to 3.06% and 30-year yields rose by 19bps to 3.21%. In other advanced-economy markets, German 10-year bund yields increased by 14bps to 0.47%, French 10-year yields gained 12bps to 0.80% and UK 10-year yields rose by 16bps to 1.44%. Italian 10-year yields fell back by 9bps to 3.13% as investors decided the German-Italian spread was too large.
(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 September survey was the Franklin Templeton Multisector Bond (Institutional) fund. Its return of +2.12% follows on from a disastrous performance in August (-5.26%) and a best-in-class performance in July (+3.23%). The second-highest return of +1.98% was produced by the Templeton Global Bond Plus Wholesale fund.
In terms of fund performance for the twelve months to September 2018, the Bentham Professional Global Income retained its position for a fourth consecutive month as the top-performing fund in the survey. Its 12-month return of 5.51% eased back a little from its comparable August figure of 5.69%.
The second-highest return of 5.18% was produced by another Bentham fund, the Bentham Professional Syndicated Loan fund.
GLOBAL BOND FUNDS
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -0.27 | -0.34 | -0.55 | 1.48 | 2.68 | |
| Alpha Diversified Income | mFund | 0.61 | 1.58 | 1.86 | 2.50 | 3.00 |
| AMP Future Directions International Bond Fund | -0.48 | -0.18 | -0.26 | 1.97 | 3.33 | |
| AMP Capital International Bond | -0.44 | -0.06 | n/a | 2.49 | 3.86 | |
| ANZ-CFS Global Credit Income EF | 0.25 | 0.71 | 1.60 | 3.54 | 3.00 | |
| Bentham Professional Global Income | mFund | 0.87 | 1.56 | 5.51 | 6.56 | 5.93 |
| Bentham Wholesale High Yield | mFund | 0.53 | 1.87 | 1.96 | 7.76 | 6.68 |
| Bentham Syndicated Loan ASX Class | mFund | 0.83 | 1.73 | 5.18 | 6.76 | 6.13 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.12 | 0.65 | 2.58 | 2.94 | 3.28 |
| BlackRock Monthly Income | 0.59 | 1.65 | 2.02 | 4.26 | 4.28 | |
| BlackRock Wholesale International Bond | -0.40 | -0.48 | -0.52 | 2.83 | 4.42 | |
| BT Global Fixed Interest Wholesale | -0.95 | -1.46 | -0.18 | 1.20 | 3.82 | |
| BT Institutional Enhanced Global Fixed Interest | -0.94 | -1.48 | 1.38 | 4.01 | ||
| CFS Wholesale Global Bond | -0.38 | 0.04 | -0.54 | 1.69 | 3.32 | |
| CFS Wholesale Global Corporate Bond | -0.33 | 0.65 | -0.27 | 4.22 | 5.17 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.24 | 0.25 | 0.61 | 2.30 | 3.28 | |
| Dimensional Global Bond Trust | -0.66 | 0.05 | 1.03 | 3.45 | ||
| Dimensional Two-Year Diversified Fixed Interest | 0.00 | 0.43 | 0.89 | 1.76 | 2.22 | |
| Franklin Templeton Global Aggregate Bd W | 0.27 | 1.14 | 0.69 | 0.94 | ||
| Franklin Templeton Multisector Bond I | 2.12 | -0.13 | -3.59 | 3.36 | 2.30 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.72 | 1.85 | 4.99 | 6.14 | 4.62 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | 1.56 | 0.19 | -2.46 | 4.39 | 5.00 |
| Legg Mason Brandywine Global Fixed Income A | 1.43 | 0.57 | -1.44 | 4.23 | 5.09 | |
| Legg Mason Western Asset Global Bond Fund | -0.09 | -0.18 | -1.04 | n/a | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | 0.62 | -1.45 | -6.68 | n/a | n/a | |
| Macquarie Global Income Opportunities Fd | 0.07 | 0.83 | 1.50 | 3.40 | 3.07 | |
| Mercer Global Credit Fund | -0.39 | 0.36 | -0.31 | 3.45 | 4.77 | |
| Mercer Global Sovereign Bond Fund | 0.80 | 0.28 | 2.78 | 3.76 | 5.59 | |
| Nikko AM International Bond | -0.58 | -0.78 | 0.05 | 2.28 | 4.18 | |
| Omega Global Corporate Bond | -0.60 | 0.14 | -0.55 | 3.02 | 3.97 | |
| PIMCO Global Bond Wholesale | mFund | -0.23 | 0.10 | 0.94 | 4.38 | 5.41 |
| PIMCO Global Credi Wholesale | mFund | -0.36 | 0.50 | 0.29 | 3.81 | 4.73 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -0.30 | 0.33 | 2.17 | 3.59 | 4.76 |
| PIMCO Unconstrained Bond Wholesale | mFund | 0.16 | 0.68 | 1.65 | 4.71 | N/A |
| State Street SSgA Global Fixed Income | -0.47 | -0.70 | 0.74 | 2.58 | 3.86 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.71 | 0.10 | -0.04 | 2.91 | ||
| Templeton Global Bond Plus W | 1.98 | 0.78 | -1.64 | 3.11 | 2.05 | |
| UBS Global Credit Fund | -0.15 | 1.08 | -0.12 | 4.21 | 4.98 | |
| UBS International Bond | -0.30 | 0.03 | 1.10 | 3.16 | 4.48 | |
| Vanguard International Credit Securities Index Hdg | -0.34 | 0.54 | 0.43 | 3.68 | 4.60 | |
| Vanguard International Fixed Interest Index Hdg | -0.48 | -0.53 | 1.02 | 2.65 | 4.38 |
*End of September 2018. Returns in AUD after fees.