Fixed income sectors outperform equities in Q1
All fixed income sectors outperformed equities in the first quarter of 2020 as stockmarkets plummeted as a result of COVID-19, according to data.
Although bond yields were low as central banks cut interest rates to record lows, and were expected to keep them low for several years, holding a fixed income funds still offered greater potential for returns than equities.
FE Analytics data found the best-performing sector, within the Australian Core Strategies universe, was Australian bonds which returned 1.3% over the three months to 31 March, 2020 followed by fixed interest mortgages which returned 0.19%. These were the only two equity or fixed income sectors which reported positive returns.
The Australian bond sector was also the best-performing sector over one year to 31 March, 2020, with returns of 4.5%.
Looking at the other five fixed income sectors, all had outperformed equity funds; Australia/global bonds lost 0.5%, global bonds lost 1.14%, global strategic bonds lost 1.65%, inflation linked bonds lost 1.9%, and diversified credit lost 3.4%.
This compared to the best returning equity sector which was the Asia Pacific single country equity sector at a loss of 8.3%.
The worst-performing equity sector was Australian geared equity which lost 40% over the first quarter. This sector was also the worst over one year with a loss of 30.3%.
Performance of Australian bond, fixed interest mortgages, Asia Pacific single country equity and Australia geared equity sectors over three months to 31 March, 2020
AUTHOR
Laura Dew
Recommended for you
Grant Hackett has been promoted from CEO of Generation Life to head up the wider Generation Development Group.
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
