How do global bonds compare to those on home soil?
Money Management, using FE Analytics, compared the Australian Core Strategies (ACS) fixed interest – global bond and fixed interest – Australian bond sectors to see where investors are better off investing.
Both the global bond and the Australian bond sector averages are fairly neck-and-neck across 10, five, three and one-year periods.
Australian bonds beat out global bonds across 10 years, with returns of 5.14 per cent, and across the year to 31 July 2018 with returns of 2.48 per cent, while global bonds marginally outperformed Australian bonds across five years, with returns of 3.55 per cent as opposed to 3.52 per cent, and across three years with returns of 2.49 per cent as opposed to 3.05 per cent.
The top performing fund across both sectors for the three years to 31 July was Perpetual’s Wholesale Alternative Income fund, which belongs to Australian bonds.
The fund returned 6.51 per cent for that period and has consistently produced top quartile returns across all time frames.
The top retail fund was the Supervised Global Income fund, which returned 5.67 per cent for the three years to 31 July this year and produced top quartile returns across all time frames but slipped to second quartile in the three months and one month to date.
Challenger’s Guaranteed Pension 31 December 2019 fund was another Australian bond fund producing top quartile returns across all time frames, with returns of 5.34 per cent for the three years to 31 July this year.
Four Australian bond funds were in the top 10 funds across both sectors, including DDH’s Preferred Income fund and IOOF’s Income fund.
PIMCO’s Global Bond and Emerging Markets funds, Russell’s Global Bond fund and Invesco’s Senior Secured Loans and Wholesale Senior Secured Income funds were the remaining global bond funds in the top ten.
The chart below shows the top performing retail Australian bond funds for the three years to 31 July 2018 against the ACS Fixed Interest – Australian Bond sector.
The chart below shows the top performing retail global bond funds for the three years to 31 July 2018 against the ACS Fixed Interest – Global Bond sector.
Among some of the worst performers were Suncorp’s Vested Investment Plan VIP Fixed Interest fund, which was a consistent bottom-quartile fund and produced returns of 0.27 per cent for the three years to 31 July.
AXA’s Guaranteed Investment Bond fund and Zurich’s Investment Plan Fixed Interest and Investment Plan Government Securities funds were also consistent bottom quartile players, with returns of 0.21 per cent, 0.44 per cent and 0.44 per cent respectively.
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