Biggest and Best Global Bond Funds

ECB QE pushed the already low bond yields into negative territory in countries such as Switzerland, Denmark and Sweden. Which investors are managing to deliver positive returns?

Ashis Dash 13 August, 2015 | 11:37AM

3 Largest Global Bond Funds

The Templeton Global Bond fund, with more than $33 billion in assets, remains one of the behemoths in this sector. The fund is co-managed by Michael Hasenstab and Sonal Desai, with Hasenstab being at the fund’s helm since 2002. His expertise in macroeconomic analysis and a well-resourced analytical team underpins this offering. The fund aims to maximise total returns through investing predominately in sovereign issuers from both developed and emerging countries. The process is driven by valuation and fundamentals.

Hasenstab’s willingness to take large off-benchmark positions, especially in emerging markets, means the portfolio and performance may deviate substantially from its category peers and benchmark. Nonetheless, Hasenstab has managed the higher risk from his unconstrained, strategic investment process well over the longer term. The fund is rated Silver by Morningstar.

The PIMCO Global Investment Grade Credit fund has been managed by Mark R. Kiesel since 2003. The fund aims to maximise total return while focusing mainly on investment grade corporate bonds. The investment process is a combination of top-down positioning determined by PIMCO’s Investment Committee, including sector and interest-rate strategies, and bottom-up ideas generated by a team of 50-plus credit specialists.

The selection criteria include superior growth, strong asset coverage, and pricing power. During his tenure, Kiesel has shown the ability to appropriately use the fund’s numerous performance drivers, in varied market conditions. The fund is rated Bronze by Morningstar.

The PIMCO Global Bond fund has been managed by Andrew Balls, Lorenzo Pagani and Sachin Gupta since September 2014. This fund is run relative to a U.S. dollar-hedged version of the Barclays Global Aggregate benchmark. Its core positions are thus in the largest developed markets sovereign debt issuers Japan, Eurozone, and the U.S., but the process allows for considerable latitude in credit, securitized issues, and emerging-markets-debt investments, which has historically been used well. The fund is rated Bronze by Morningstar.

3 Best Performing Global Bond Funds

The Templeton Global Total Return fund is co-managed by Michael Hasenstab and Sonal Desai. It employs an investment approach similar to the Templeton Global Bond Fund, however expanding the universe of predominately sovereign issuers into corporate issuers.

This unconstrained nature of the mandate, allowing the manager to allocate freely across the fixed-income spectrum, leads to significant deviations in positioning from its benchmark, especially into emerging market sovereigns and currencies, which has contributed to the fund’s significant outperformance against its benchmark over Hasenstab’s tenure. The fund is rated Bronze by Morningstar.

The Amundi Bond Global Aggregate fund has been managed by Laurent Crosnier since April 2014.

The investment approach is largely top down and aims to maximize total return. The fund draws on a number of performance drivers – duration, credit (including High Yield and Asset Backed Securities) and currencies – which have contributed to the performance over the long term.

However, following the departure of the previous manager, Hervé Hanoune, and deputy CIO, Markus Krygier, the fund was rated Neutral by Morningstar.

The Jupiter Dynamic Bond fund has been managed by Ariel Bezalel since May 2012. Bezalel combines his top-down macroeconomic views with rigorous bottom-up security selection from the credit analyst team. The fund’s unrestricted “go anywhere” approach with the flexibility to invest in corporate and sovereign issuers globally, straddling the credit ratings spectrum, has led to the strong risk-adjusted returns since its launch.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Amundi Fds Glbl Aggt Bd A EUR AD D162.19 EUR-0.42
Jupiter Dynamic Bond D EUR Acc13.13 EUR0.08
PIMCO GIS GlInGd Crdt E USD Acc19.40 USD0.31
Templeton Global Bond A(Mdis)USD16.18 USD0.28
Templeton Global Total Ret Bd A Inc1.30 GBP0.05

About Author

Ashis Dash  is a Morningstar Fund Analyst

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