Active managers had it tough in the first half of 2012 as issues in peripheral Europe continued to reap havoc on fixed interest markets, according to Standard & Poor's (S&P) half-yearly fixed interest peer group review.
S&P analyst David Erdonetz said performance had not recovered since 2010, when all managers targeting the UBS Composite Bond Index had achieved above benchmark returns.
S&P downgraded a number of global fixed interest funds at the end of 2011, blaming poor performance on market volatility, short duration and overweight credit calls.
Duration continued to dictate S&P's core offerings in 2012, along with managers' ability to predict future paths of interest rates. Credit-based offerings had been susceptible to widening spreads in a risk-off environment, the report said.
Bentham Asset Management and PIMCO were the only global fixed interest funds to receive five-star ratings, which they also managed to hold throughout 2011.
S&P awarded Tyndall Investment Management, PIMCO, Colonial First State Global Asset Management and AMP Capital Investors five-star ratings for their Australian fixed interest offerings, while OnePath's Wholesale Diversified High Yield Trust and Wholesale Diversified Fixed Interest Trust remained on hold.
The only notable team change, according to S&P, was the addition of former ING Investment Management staff members, Rachel O'Connor and credit analyst Thomas Wu to the UBS Asset Management team.