Global fixed income funds battered in 2011: S&P
The global fixed income sector has suffered a number of fund downgrades, according to Standard & Poor's (S&P's) latest sector review.
As part of its '2011-2012 Global Fixed Income Sector Review', the research house downgraded a number of global fixed income funds from 4 to 3 stars including the Colonial First State Wholesale Diversified Fixed Interest and MLC Wholesale Horizon 1 Bond Portfolio funds.
S&P Fund Services analyst David Erdonmez said the poor performance of some global fixed income funds were the result of market volatility, short duration and overweight credit calls that began to build towards the end of last year.
This volatility was a result of a number of key factors including the sovereign rating downgrade of the United States, the Greek sovereign crisis and the potential for contagion to Spain and Italy, S&P said.
The report also stated that there was "a significant flight-to-quality in the government bond sector and subsequent negative movement in spread-related sectors".
Despite the downgrades, PIMCO's five global strategies and Bentham Asset Management Syndicated retained their five-star ratings, while the newly-rated Vanguard Diversified Bond Index was given a rating of 4 stars.
S&P Fund Services analyst David Erdonmez said fund managers had a tough time in the second half of 2011, largely due to short duration and overweight credit calls.
"These positions hurt performance given the volatility that began to build during this period," he said.
This volatility was a result of a number of key factors including the sovereign rating downgrade of the United States, the Greek sovereign crisis and the potential for contagion to Spain and Italy, S&P said.
The report also stated that there was "a significant flight-to-quality in the government bond sector and subsequent negative movement in spread-related sectors".
Despite the downgrades, PIMCO's five global strategies and Bentham Asset Management Syndicated retained their five-star rating, while the newly-rated Vanguard Diversified Bond Index was given a rating of 4 stars
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