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
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