Only two global bond managers outperformed the index over the 12 months to the end of June, according to the latest Melville Jessup Weaver (MJW) investment survey.
The MJW report, which tracks the performance of wholesale managers in the NZ market as well as KiwiSaver funds, found just AllianceBernstein and the Fisher Funds-fronted Wellington global bond funds to squeak past the benchmark Barclays Global Aggregate over the annual period.
“These two managers were the only two managers to achieve a return above 10% and the only two to beat the benchmark of 10.1%,” the MJW report says. “PIMCO has had a fair degree of success in this sector, having claimed the 1st place ranking for all periods but the one year. PIMCO also has a high information ratio of 1.2 for the five years and Russell was marginally behind with 1.1.”
As an aside, the Fisher version of the PIMCO global bond fund – run to a separate mandate – has trailed the plain-pack PIMCO product over all time periods.
For example, the MJW report shows over the 10-year period the PIMCO fund returned 9.8 per cent per annum compared to 9 per cent for the Fisher-labeled PIMCO global bond product (against a benchmark of 8.2 per cent).
Most of the global fixed income managers in the MJW survey turned in above or close-to-at benchmark performances over longer time periods. However, AMP Capital proved the exception, lagging all competitors and the benchmark (by almost 3 per cent over the 12 months to end June) in every time period, the MJW report shows.
“The spread of returns from NZ bonds was much tighter with all core managers achieving returns between 7.5% and 8.5% over the past 12 months; this compares to a benchmark of 8.0%. The first place manager over this period was almost too close to call: Fisher had the highest return of 8.50% while ANZ was just behind with 8.47%,” the MJW report says. “The Nikko fund also has to be commended for achieving a first place ranking for both the three- and five-year periods, and a second place ranking over the 10 years. AMPCI was top for the 10-year period.”
In the KiwiSaver market, the MJW survey found a few outliers in the otherwise “reasonably bunched” fund returns, particularly in the growth category.
At opposite ends of the scale, the Milford Active Growth KiwiSaver fund returned 10.5 per cent over the 12 months to June 30 while the KiwiWealth growth fund languished in bottom-place after returning -8.3 per cent during the same period.
The result is perhaps not so surprising in light of the vastly different asset allocation strategies of the two funds, allegedly in the same risk profile.
The Kiwibank-owned KiwiWealth growth fund has about 80 per cent in global shares compared to just over 9 per cent for the Milford Active Growth fund. Meanwhile, the Milford fund allocated over 63 per cent to Australasian shares (of which about 43 per cent was in NZ equities) compared to zero for the KiwiWealth product, in a period that has seen local equities return over 21 per cent and global shares flat on a fully-hedged basis (or -7.7 per cent unhedged).
All other KiwiSaver growth funds returned between 4.6 per cent and -0.5 per cent, the MJW figures show.
The MJW report says: “… when we look at the results, a manager will have done relatively well compared to their peers if:
- _They had high NZ shares exposure
- _Their global shares exposure was fully hedged, or put another way if the manager was fully unhedged then the return suffered.
- _They had an overweight position to global bonds compared to NZ bonds.”