Which bonds funds have navigated the rate cut best?
As the Reserve Bank of Australia (RBA) cuts rates to 0.1%, which Australian bond funds have performed best since the last rate cut in March?
Rates were cut by the RBA on 19 March to 0.25% which was a record low for Australia and were cut further to 0.1% this week.
Shane Oliver, chief economist at AMP Capital, said: “The RBA will likely tie the need for more stimulus back to revised economic forecasts which will likely continue to show that it does not expect to meet its inflation and employment objectives over the next two years.
“[I expect] a cut in the cash rate, the term funding facility rate and the three-year bond yield target to 0.1% (from 0.25%).”
According to FE Analytics, within the Australian Core Strategies universe, there were 85 Australian bonds funds available to investors.
Since rates were cut on 19 March to 30 September, the best-performing Australian bond fund had been BetaShares Active Australian Hybrids which returned 14.6%. This was followed by Elstree Enhanced Income fund which returned 13.2%. These were the only two funds in the sector to report double-digit gains over the period.
The BetaShares fund aimed to invest in an actively-managed portfolio of hybrid securities, bonds and cash with reduced volatility and downside risk.
The Australian bond sector had returned an average of 3.8% over the same period.
Performance of best-performing Australian bonds versus sector since 19 March to 30 September 2020
Out of the total sector, there were only two funds which had reported losses over the same period which were Life Settlements Wholesale and GAM FCM ILS Yield which lost 11.2% and 7.6% respectively.
Looking over a longer time period, the best-performing fund over one year to 30 September, 2020, was Janus Henderson Australian Fixed Interest Institutional which returned 4.6% while the sector had returned an average of 2.3%.
AUTHOR
Laura Dew
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
