Five global bond funds for investors turning conservative

fixed income global bonds conservative funds institutional investors downturn in the economic cycle blackrock survey public equities private market edwin conway Alternatives illiquid assets private credit FE Analytics Invesco invesco senior secured loans bloomberg ausbond bank bill index crown rated funds supervised global income fund PIMCO pimco income wholesale pimco emerging markets bond russell global bond bloomberg barclays global aggregate index

8 January 2019
| By Anastasia Santoreneos |
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Global institutional investors are looking to mitigate risks amid concerns about a downturn in the economic cycle, according to BlackRock’s annual survey of global institutions, prompting Money Management to single out some global bond funds that have performed well over the last three years.

Over half of respondents (56 per cent) stated that the possibility of the cycle turning was one of the most important macros risks influencing their rebalancing and asset allocation plans, and over half (51 per cent) also intended to decrease their allocation to public equities.

Edwin Conway, global head of BlackRock’s institutional client business, said as the economic cycle turns, private markets could help clients navigate the more challenging environment.

“We have been emphasizing the potential of alternatives to boost returns and improve diversification for some time, so we’re not surprised to see clients increasing allocations to illiquid assets, including private credit,” he said.

Almost a third (29 per cent) of respondents intended to increase allocations to fixed income last year, and 38 per cent intend to do so this year.

Data from FE Analytics shows Invesco’s Senior Secured Loans fund took out the top spot for the three years to 30 November 2018, with returns of 5.88 per cent as compared to the global bonds sector average of 2.87 per cent and its benchmark, the Bloomberg AusBond Bank Bill index, which returned 1.93 per cent.

The four FE Crown-rated Supervised Global Income fund sits a close second with returns of 5.80 per cent for the same period, and PIMCO’s Income Wholesale fund and Emerging Markets Bond fund follow with returns of 4.91 per cent and 4.75 per cent respectively.

The three FE Crown-rated Russell Global Bond fund returned 4.50 per cent for the same period, also outperforming its benchmark, the Bloomberg Barclays Global Aggregate index, which returned 1.93 per cent.

The chart below tracks the performance of the funds from 30 November 2015 to 30 November 2018 as compared to the Bloomberg AusBond Bank Bill index.

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