Fixed income investments outperform equities

Australia's top performing fixed income funds have outperformed 81 per cent of equity funds in the market, according to the Money Management Investment Centre (MMIC).

The Australian Securities and Investment Commission's (ASIC's) Moneysmart guide said cash and fixed interest investments could take up 15 to 100 per cent of an investor's portfolio, depending on their asset allocation.

The MMIC data showed BT's Colonial First State income fund generated the best return in the class with 88.02 per cent over the last 12 months, however it recorded the highest volatility (100 per cent).

Russell's global fund was in second place after it generated a 17.01 per cent return over the last 12 months with 8.61 per cent volatility. In third place was PIMCO's wholesale global real return fund with a 13.93 per cent return and a 5.17 per cent volatility.

Those funds outperformed 81.5 per cent of equity based managed funds on Financial Express (or 949 funds), which debunked the theory that fixed interest investments were floundering.

Top five performed fixed income funds

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Further down the performance scale in 10th place was Colonial First State's wholesale global corporate bond with a 10.17 per cent return and 2.95 per cent volatility. In 20th place was PIMCO's global wholesale bond fund with a 9.18 per cent return (2.43 per cent volatility).

However, if investors wanted minimum volatility, the pick of the litter went to La Trobe's pooled mortgage fund with a 5.33 per cent return (over the last 12 months) and zero volatility. Triology's monthly income trust scored 0.05 per cent volatility and returned 8.39 per cent, while Challenger's guaranteed pension fund generated the same amount of volatility, but returned 5.06 per cent to investors.