22
Fund selector Global Fixed income
Top ranked funds Assets under management
top 10 funds by assets under management
3-year 3-year 3-year 3-year 3-year 3-year M’star Fund Dom
% chg Alpha Beta R² Sharpe volatility Ratings size (£m)
Templeton global Bond a M-D $ 29.16 0.48 0.76 0.36 0.15 2.36 HHHHH 5,807.73 lux
Pimco giS global Bond H Ret -2.76 -0.15 0.71 0.57 -0.16 1.73 HH 2,148.16 ireland
Templeton global Total Return a M-D $ 18.14 0.2 1 0.37 0.03 3.03 HHHH 1,395.19 lux
RiC global Bond a acc 6.48 -0.05 1.14 0.94 -0.05 2.18 HH 1,052.46 ireland
Sei gMF global Fixed inc instit’nal (uS) £ a n/a n/a n/a n/a n/a n/a – 754.51 ireland
CaaM Funds global Bond C 11.5 0.08 0.9 0.75 -0.01 1.93 HHHH 728.45 lux
Bny Mellon global Bond a $ 18.01 0.14 1.42 0.89 0.04 2.8 HHHH 628.62 ireland
aB global Bond a $ 3.19 0 0.62 0.79 -0.1 1.29 HH 465.46 lux
Sanlam univer Bond a acc 10.76 0.09 1.08 0.94 0.01 2.06 HHH 409.78 ireland
Baring international Bond a 13.77 0.03 1.47 0.88 0.01 2.9 HHH 394 ireland
20 Mar ’06 – 23 Mar ’09. Bid to bid, $, gross income, no cap. Source: Morningstar
top 3 funds by aum vs index
40
30
20
%
10
Templeton Global
Total Return A
Templeton Global Bond A
0
M’star IM
FI Global $
-10 Pimco GIS Glbl Bond H Ret
Mar ’06 Sep Mar ’07 Sep Mar ’08 Sep Mar ’09
20 Mar ’06 – 23 Mar ’09. Source: Morningstar
The performance of the
largest funds is by and
large respectable over three
years, with most generating
double-digit returns.
It is worth highlighting
that even some of the largest
funds in what is a large
and diverse universe, are
relatively small and that
there is significant gap
between the largest, with
assets of nearly £6bn, and
the tenth largest, only
£394m. This suggests investment
in this sector is only
finding its way into a handful
of funds.
On a performance basis,
it is surprising that the fund
run by renowned fixed
income manager Pimco is
the only member of this
group to lose money over
three years and has also
racked up the biggest loss
in the past year of its largest
by assets peers, falling
in excess of 10%.
Toogood says the fund’s
size and relative inability to
position its holding anything
other than strategi-
top funds – 3-year risk and return
Return (%)
40
30
20
CAAM Funds
Global Bond C
10 AB Global
Bond A $
Sector avg
Templeton Glbl
Tot Ret A M-D $
0
Baring Int’l Bond A
Pimco GIS
RIC Global Bond A Acc
-10 Glbl Bond H Ret
1 1.5 2 2.5 3 3.5
Standard deviation (%)
No 3-yr data for SEI GMF Glbl FI Inst. 20 Mar ’06 – 23 Mar ’09
Bid to bid, $, gross income, no cap. Source: Morningstar
cally, rather than for the
short term, or tactically,
may be responsible.
“This drawback was
emphasised by the significant
reduction in credit
market liquidity in 2008,
which affected the performance
of many funds in both
the global aggregate and
credit sectors,” he says.
“The Pimco Global
Bond Fund suffered over
the year due to a relatively
Templeton Glbl Bond A M-D $
Sanlam Univer
Bond A Acc
BNY Mellon
Glbl Bond A $
early move to overweight
spread products, including
corporate bonds and mortgage-backed
securities,
which continued to be sold
off for much of the year.
Nonetheless, it remains
conceivable that this
medium- to long-term positioning
will generate strong
outperformance over the
life of the bonds, or when
investors are minded to
increase their risk levels.”
Fund selector’s choice
Alan Orchard, director, RBC Wealth Management
We are currently in an era where size may be important for bond
funds, as there is no doubt that one needs sufficient resources to
consider everything about bonds before investing. The larger houses
could have an advantage as they should have the resources to help
them avoid some of the problem issues that the market has seen of
late. This could be crucial over the coming months and years.
The varying performance of the funds is most significantly driven
by their different mandates. The Templeton Global Bond Fund is
primarily invested in government issues, but these ‘safer’ investments
are negated by the fact that the fund invests heavily in developing
countries. So this might be an interesting play on a global recovery
led by these countries.
If one is looking to benefit from a possible bounce back in
corporate names, Pimco might be a better option for investing. It is
more dollar-focused, with a maximum currency exposure of 20% not
hedged back to the currency. They have about 50% invested in issues
that are rated below AAA, and their fund includes some financials.
Templeton has two
funds in this group, reflecting
the popularity of its
fixed income offering and
performance success.
Global Bond was discussed
in the best performers over
three years, where it
appeared in second spot.
Another fund managed
by Michael Hasenstab, the
Global Total Return Fund,
has also attracted significant
assets under management.
Its mandate is less
constrained than that of its
counterpart, permitting
investment across the entire
fixed income universe. In
practice, this extends the
opportunity set from sovereign
instruments to include
exposure to both investment
grade and high yield
credit from developed and
emerging markets.
The fund has performed
strongly over recent years
and currently reflects the
Templeton team’s increasing
risk appetite through
growing exposure to
selected investment grade
corporate debt as well as
emerging market sovereign
and currency positions.
BNY Mellon Global
Bond is the pick of the
remainder of the group in
performance terms.
The fund is driven by a
top-down, macro investment
approach and, like all
Newton products, pays
heed to the Newton inhouse
investment view.
The macro based investment
style means the fund
primarily adds value
through duration, relative
value and currency bets.
A recent Standard &
Poor’s report on the fund
gave it a AAv4 rating. It
noted recent portfolio
themes were holdings in
Eastern European economies
linked to the manufacturing
cycle, primarily in
Poland and Hungary.
At the start of the year,
the fund’s manager Paul
Brain had above benchmark
exposure to European
duration plays, believing
the ECB had further rate
cuts to make.
INTERNaTIONaL aDVISER [www.international-adviser.com] May 2009
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