Conditions were tough for global fund managers in September. Longer-term US Treasury bond yields finished the month noticeably higher, as did yields in the UK and major euro-zone economies. The Aussie dollar was again weaker against the USD and the yen but stronger against the euro and sterling. Only 7 out of 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 September was -0.97% (August: -0.12%) while the median return over the 12 months including September came to 0.40% (August: 1.77%). The Barclays Global Aggregate Bond Index, a widely-used index in this sector, returned -1.05% in September and -1.00% over the rolling year (when hedged into Australian dollars).
In US markets, the 2-year Treasury yield added 8bps to 0.28% over the month, the 10-year yield gained 18bps to 1.49% and the 30-year yield rose 11bps to 2.04%. BBB spreads finished a touch higher.
In other major bond markets, German and French 10-year bond yields each increased 20bps to -0.22% and +0.13% while the 10-year UK gilt yield finished the month 35bps higher at 0.91%.
The best performing global fund for the month in the YieldReport September survey was the Invesco Wholesale Senior Secured Income Fund. It produced a return of +0.80% for the month following a top-quartile return of 0.75% in August and a bottom-quartile return of 0.00% in July.
The second-highest return was produced by the T. Rowe Price Dynamic Global Bond Fund. Its return of +0.59% followed a bottom-quartile returns of -0.25% in August and -0.43% in July.
In terms of fund performance for the twelve months to the end of September, the Invesco Wholesale Senior Secured Income Fund retained its title as the highest performing fund for a seventh consecutive month. The Invesco fund produced a 12-month return of 11.96%, with the Bentham Wholesale High Yield Fund taking over from its sibling fund, the Bentham Professional Syndicated Loan Fund, as the second-highest ranked fund after it produced a 12-month return of 9.27%.
| GLOBAL BOND FUNDS | ASX mFund | 1m (%) | 3m (%) | 1y (%) | 3y (%) | 5y (%) |
|---|---|---|---|---|---|---|
| Advance International Fixed Interest Multi-Blend | -1.01 | -0.23 | -0.56 | 3.09 | 1.79 | |
| Alpha Diversified Income | mFund | -0.15 | 0.36 | 0.49 | 1.75 | 1.64 |
| AMP Future Directions International Bond Fund | -1.10 | -0.27 | -1.95 | 3.16 | 1.84 | |
| AMP Capital International Bond | -1.05 | -0.14 | -1.41 | 3.70 | 2.37 | |
| ANZ-CFS Global Credit Income EF | 0.09 | -0.45 | 2.61 | 0.33 | 0.97 | |
| Ardea Real Outcome Fund | -0.50 | -0.77 | 0.40 | 5.02 | 4.71 | |
| Bentham Professional Global Income | mFund | 0.52 | 0.63 | 8.61 | 3.43 | 5.19 |
| Bentham Wholesale High Yield | mFund | 0.02 | 0.88 | 9.27 | 4.79 | 5.45 |
| Bentham Syndicated Loan ASX Class | mFund | 0.36 | 0.87 | 9.00 | 2.31 | 4.16 |
| Kapstream Wholesale Absolute Return Income | mFund | 0.01 | 0.25 | 1.22 | 1.81 | 2.14 |
| BlackRock Wholesale International Bond | -1.02 | -0.12 | 0.28 | 4.63 | 2.87 | |
| Pendal Enhanced Global Fixed Interest (Wholesale) | -1.13 | 0.16 | -3.20 | 3.58 | 1.77 | |
| CFS Wholesale Global Corporate Bond | -1.08 | -0.26 | 0.40 | 5.96 | 4.09 | |
| Dimensional Five-Year Diversified Fixed Interest | -0.72 | -0.13 | 0.13 | 1.83 | 1.48 | |
| Dimensional Global Bond Trust | -1.62 | -0.33 | -1.02 | 4.71 | 3.07 | |
| Dimensional Two-Year Diversified Fixed Interest | -0.19 | -0.15 | 0.09 | 1.42 | 1.41 | |
| Franklin Templeton Global Aggregate Bond Fund (W Class) | -0.74 | 0.09 | -0.37 | 4.13 | 2.09 | |
| Franklin Templeton Multisector Bond (Institutional) | -2.82 | -2.79 | -1.77 | -3.71 | -0.78 | |
| Invesco Wholesale Senior Secured Income | mFund | 0.80 | 1.55 | 11.96 | 3.50 | 4.24 |
| Legg Mason Brandywine Global Opp Fixed Income A | mFund | -1.64 | -2.44 | 5.83 | 4.08 | 3.20 |
| Legg Mason Western Asset Global Bond Fund | -0.95 | 0.00 | 1.58 | 4.93 | n/a | |
| Legg Mason Western Asset Macro Opportunities Bond Fund | -0.99 | 0.69 | 5.19 | 7.46 | 5.42 | |
| Macquarie Global Income Opportunities Fund | -0.19 | 0.69 | 2.95 | 3.40 | 3.23 | |
| Macquarie Core Australian Fixed Interest Plus Fund | -1.61 | 0.83 | 0.34 | 5.66 | 3.96 | |
| Mercer Global Credit Fund | -0.97 | -0.02 | 1.29 | 5.30 | 3.43 | |
| Mercer Global Sovereign Bond Fund | -1.06 | -0.03 | -1.29 | 4.33 | 3.19 | |
| Omega Global Corporate Bond | -1.32 | -0.76 | -0.98 | 3.90 | 2.36 | |
| PIMCO Global Bond (Wholesale) | mFund | -0.87 | 0.07 | 0.89 | 4.41 | 3.43 |
| PIMCO Global Credi (Wholesale) | mFund | -0.94 | -0.07 | 1.54 | 4.44 | 3.26 |
| PIMCO Diversified Fixed Interest Wholesale | mFund | -1.20 | 0.10 | -0.21 | 4.18 | 3.15 |
| PIMCO Unconstrained Bond (Wholesale) | mFund | -0.21 | -0.10 | 3.24 | 3.11 | 3.47 |
| State Street SSgA Global Fixed Income Trust | -1.21 | -0.09 | -2.42 | 3.88 | 2.26 | |
| T.Rowe Price Dynamic Global Bond Fund | 0.59 | -0.09 | 3.65 | 3.49 | 2.24 | |
| UBS Global Credit Fund | -1.20 | -0.09 | 1.84 | 5.89 | 4.12 | |
| UBS International Bond | -0.93 | 0.07 | -0.27 | 4.04 | 2.70 | |
| Vanguard International Credit Securities Index (Hedged) | -1.07 | -0.11 | 0.73 | 4.73 | 3.27 | |
| Vanguard International Fixed Interest Index (Hedged) | -1.32 | -0.23 | -2.45 | 3.46 | 2.09 |