Trade war didn’t hold back best diversified credit fund

fixed interest diversified credit funds FE Analytics premium asia BetaShares PIMCO macquarie Capital Group

22 January 2020
| By Chris Dastoor |
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Despite the back and forth over US/China trade talks, a China fund lead the fixed interest diversified credit sector over the last year, according to FE Analytics data.

Within the Australian Core Strategies universe, the fixed interest diversified credit sector returned 6.17% over the year to 29 November, 2019.

The best performing funds were Premium Asia Income (17.24%), BetaShares Investment Grade Corporate Bond ETF (15.2%), PIMCO Capital Securities Wholesale (14.83%), Macquarie Core Plus Australian Fixed Interest (14.72%) and Capital Group Global Corporate Bond Hedged AU (13.57%).

According to their November fact sheet, Premium Asia’s recent performance was boosted by the expectation of reaching Phase One in the US/China Trade War, but that alone won’t be enough.

“We continue to expect the trade negotiation will be a long, drawn-out process, and the two world superpowers battling for supremacy on all fronts will be the new normal,” it said.

“Investors should get used to it. Geopolitics and trade frictions will impede global growth, delay recovery and result in low global rates and a rising number of negative rate products in the market.”

Premium Asia’s top holdings were Golden Wheel Tiandi (3.3%), GD Poly (3.1%), Tongfang Aqua (3%), China Jinjiang Environment (3%) and Modern Land China (2.4%), as at 30 November, 2019.

Their country allocation was 95% China/Hong Kong, and real estate (67%) was the only sector that had a double-digit weighting.

BetaShares’ top holdings were Fonterra Cooperative Group (4.6%), Emirates NPD Group (4.5%), Telstra (4.5%), QNB Finance (4.4%) and United Energy Distribution (4.3%), as at 31 December, 2019.

Capital Group’s top holdings were US Government (3%), Microsoft (2.1%), Unicredit (1.9%), BP (1.7%) and Allergan (1.7%), as at 31 December, 2019.

Top five performing fixed interest diversified credit funds v sector over the year to 29 November 2019

 

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