September, 2023
The Fund performed broadly in line with the benchmark in September as credit markets remained resilient amid a volatile rates backdrop. Performance from financials was relatively neutral, with major bank senior spreads rangebound over the month and fixed rate bonds retaining their appeal as outright yields remain enticing. Tier 2 was a modest positive despite a fairly volatile month in spread terms, with positioning focused in shorter dated, high carry bonds. Corporates were broadly steady, with shorter dated auto names outperforming.
Structured securities remain a bright spot, spreads rallying further over the month and providing high quality and low beta carry for the Fund over relatively tight corporate spreads. The modest overweight duration position was a detractor from returns, though positioning is small and remains appropriate as a hedge against some of the credit risk. Higher than benchmark carry helped offset some of the instability in rates markets. Over the month, the Fund participated in transactions from issuers such as NBN Co, Royal Bank of Canada, Suncorp, Toyota, Volkswagen, WestConnex and Westpac.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-A-Monthly-Communication-Platform-MCOM-MCORPBA-ANZ-7.pdfAugust, 2023
The Fund outperformed the benchmark in August as Australian credit spreads marginally tightened. Financials continued to be an important driver of performance in August, with significant contribution particularly from some of the longer dated European names. The corporate sector contributed to a significant portion of the excess performance with higher beta industrials and wider-trading names narrowing materially in spread. Structured securities continued their recent robust performance with new deals providing further proof of the strong demand for high quality bank Residential Mortgage-Backed Securities (RMBS) paper. Longer than benchmark duration positioning also contributed to returns, with yields moving lower over the month. Over the month, the Fund participated in transactions from issuers such as ANZ, CBA, Westpac, NBN Co, LT 2023-1 and IDOLT 2023-1.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-A-Monthly-Communication-Platform-MCOM-MCORPBA-ANZ-6.pdfJuly, 2023
The Portfolio outperformed the benchmark in July as Australian credit spreads rallied towards their 2023 tights. Within senior financials offshore banks contributed the most, with strong rallies from European names in particular. The underweight position in longer-dated major banks also contributed to returns as they lagged the broader spread rally. Tier 2 also performed well into the new financial year, with an improved supply outlook and market technicals contributing to a near 30bp rally in recent deals. Select corporate names outperformed, with higher beta sectors and wider-trading names moving tighter. Utilities were arguably the strongest sector, as recent well-received deals provided a number of price points and spreads subsequently rallied. Structured securities continued their recent rally, moving another 5- 10bps tighter over the month as secondary flows were heavily skewed towards buying. Longer than benchmark duration positioning also contributed to returns, with yields rallying over the month. Over the month, the Portfolio participated in a transaction from CNH Industrial Capital
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-A-Monthly-Communication-Platform-MCOM-MCORPBA-ANZ-5.pdfJune, 2023
The Portfolio underperformed the benchmark in June as protection duration positioning detracted from performance. Credit positioning provided a partial offset with senior financials contributing the most to performance as the curve bull-flattened. Subordinated financial paper also helped drive performance as spreads tightened uniformly across the curve. Corporates provided solid performance across most sectors and the recently issued deals especially in the utility sector such as Ausnet 10-year senior led the strong performance from the sector. Structured securities were a large positive contributor with spreads marked tighter over the month. The Portfolio continued to benefit from higher than benchmark carry. Over the month, the Portfolio participated in transactions from issuers such as Harvey 2023-1, Lion 2023-1, Westpac Banking Corporation, QBE Insurance Group, AGI Finance and Transpower New Zealand.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-A-Monthly-Communication-Platform-MCOM-MCORPBA-ANZ-4.pdfMay, 2023
The Portfolio performed broadly in line with the benchmark in May with credit spreads relatively rangebound. Financials were a positive contributor to performance while corporates provided solid performance particularly in the utilities space as several primary deals set firm spread levels and led to a broad-based sector rally. Structured securities again contributed to Portfolio returns with spreads at historically wide levels. However, this was offset by the detraction from the modest protective duration position given the material move wider in rates. Over the month, the Portfolio participated in transactions from issuers such as Ausnet, Credit Agricole, Bendigo and Adelaide Bank, National Australia Bank and Suncorp.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-A-Monthly-Communication-Platform-MCOM-MCORPBA-ANZ-3.pdfApril, 2023
The Portfolio outperformed the benchmark in April despite ongoing US regional bank troubles. Financials were the largest contributor to the outperformance as spreads tightened in major bank senior and subordinated paper. The Portfolio’s focus on shorter dated corporate credit was a positive for returns with long-end bonds underperforming. Structured securities again contributed to performance, with a small amount of tightening over the month in AAA spreads despite ongoing supply. Over the month, the Portfolio participated in transactions from issuers such as Apollo 2023-1 and Worley.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-A-Monthly-Communication-Platform-MCOM-MCORPBA-ANZ-2.pdfFebruary, 2023
The Fund outperformed the benchmark in February as Australian credit spreads outperformed global peers. Excess returns were driven by BBB credits and higher beta corporates, with further credit curve flattening as the market digests a lack of issuance and higher all-in yields. Senior financials moved tighter despite heavy supply, with Tier 2 bonds also benefitting performance with primary not able to satisfy investor demand particularly in fixed rate tranches. Structured securities were a strong contributor, with spread tightening of over 20bps over the month and very strong demand from investors. Higher than benchmark carry also benefitted the Fund. Over the month the Fund participated in transactions from issuers such as Westpac Banking Corporation, MUFG Bank, FPTT 2023-1 and TRTN 2023-1.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-A-Monthly-Communication-Platform-MCOM-MCORPBA-ANZ-1.pdfDecember, 2022
The Fund outperformed the benchmark in December as Australian credit spreads edged tighter. With five-year major bank senior debt steady at around 100bps over the month, the higher beta names and sectors contributed to most of the outperformance. Tier 2 was a solid contributor, with spreads around 20bps tighter on the month as longer dated lines outperformed. Structured securities remain a strong contributor to excess returns, with issuance at historically wide levels and seasoned lines in high demand in the secondary market. After a significant 20bp rally in rates markets at the beginning of the month, interest rate duration was trimmed. Higher than benchmark carry also aided the outperformance. Over the month the Fund participated in transactions from issuers such as Suncorp and CONQ 2022-1.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-O-Monthly-Communication-mFund-MCOM-MCORPBO-ANZ.pdfJuly, 2022
The Fund outperformed the benchmark in July as rates and credit spreads stabilised. Persistent demand saw major bank senior paper outperform in the Australian credit market, and this contributed positively to performance as the Fund started accumulating major bank senior paper since the start of the year. While spreads of higher-beta bonds generally ended the month sideways to slightly wider, higher-thanbenchmark carry and steep rolldown of the credit curve continued to contribute positively to performance. The Fund’s modest protective duration positioning also helped drive performance as rates rallied 45bps and 60bps in the 3-year and 10-year part of the curve, respectively, as the shift towards a more balanced rhetoric from central banks, combined with softer tier 1 data, drove the rally. It was a healthy month of supply in the primary market, and the Fund participated in transactions from issuers such as Canadian Imperial Bank of Commerce and John Deere.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/Macquarie-Corporate-Bond-Fund-Class-A-Monthly-Communication-Platform-MCOM-MCORPBA-ANZ.pdfFebruary, 2022
The Fund achieved a negative absolute return in February. Credit positioning detracted from performance, as credit spreads widened. Interest rate exposure was also a detractor as yield curves continued to aggressively push higher in response to inflationary concerns.
At the sector level, allocations to subordinated banks, industrials, and real estate were the main detractors. At the security level, exposure to Loy Yang Power Project was the main contributor. Exposures to ABN AMRO Bank, Scentre Group Trust 2 and Svenska Handelsbanken were the main detractors. The Fund reduced credit risk over the month through A/BBB non-financial credit, as well as through implementation of credit derivative hedging, and maintained interest rate risk towards the lower end of its mandated range.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-10.pdfJanuary, 2022
The Fund produced a negative return (before fees) in January, underperforming the benchmark. Performance was impacted by interest rate movements, which more than offset positive performance on credit factors. Interest rate markets saw sharp moves higher in bond yields in response to further evidence of rising inflation, which resulted in more rate hikes being priced into the short-end of the yield curve. These moves led to sharp losses across Australian and global fixed income products in general, with the Fund being one of the better performers on this front. Credit positioning benefited performance, as despite some weakness in risk markets, the Australian credit market was a relative outperformer, with positive excess returns from credit seen as the capital impact of modestly wider credit spreads failed to offset the income return. During the month, the Fund participated in primary issuance from Suncorp Metway, Commonwealth Bank of Australia and Bank of Nova Scotia (Toronto Branch).
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-9.pdfDecember, 2021
The Fund produced a negative return (before fees) in the December quarter Interest rate moves were the primary driver of this result, reflecting sharp moves higher in bond yields as markets reassessed upwards the likelihood of future hikes in the cash rate. These moves led to sharp losses across Australian and global fixed income products in general, with the Fund being one of the better performers on this front. Credit positioning benefited performance, as the contribution from carry more than offset the impact of credit spread movements. At the sector level, allocations to subordinated banks, diversified financials and consumer discretionary were the top performers. Allocations to securitised product and consumer staples were the only detractors. At the security level, exposures to ABN AMRO Bank, ING Groep and BPCE were the main contributors. Exposures to AusNet Services Holdings, Westconnex Finance Company and Woolworths Group were the main detractors. During the quarter, the Fund participated in primary issuance from Optus Finance, Bank of Queensland, Ampol, Computershare and Driver Australia
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-8.pdfNovember, 2021
The Fund produced a flat absolute return (before fees) in November. Interest rate management benefited performance, as the contribution from duration management more than offset the impact of yield curve positioning. Credit positioning detracted from performance, as the impact of credit spread movements more than offset the contribution from carry. At the sector level, allocations to technology and covered banks were the top performers. Allocations to subordinated banks, real estate and diversified financials were the main detractors. At the security level, exposures to Australian Prime Property Fund and Intel Corporation were the main contributors. Exposures to ABN AMRO Bank, Macquarie Bank and Woolworths Group were the main detractors. During the month, the Fund participated in primary issuance from Optus Finance, Ampol Limited, Computershare and Bank of Queensland
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-7.pdfOctober, 2021
The Fund produced a negative absolute return in October. Interest rate exposures detracted from performance, reflecting the impact of sharp moves higher in bond yields over October, particularly in the front part of the curve. Credit positioning benefited performance, reflecting the contribution from carry. At the sector level, allocations to diversified financials, banks and securitised product were the top performers. Allocations to real estate and utilities were the only material detractors. At the security level, exposures to BPCE, Banco Santander and ING Groep were the main contributors. An exposure to AusNet Services Holdings was the only material detractor. During the month, the Fund participated in primary issuance from Bank of Queensland and Driver Australia
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-1-1.pdfSeptember, 2021
The Fund produced a positive absolute return in the September quarter. The Fund had a positive quarter, with a strong contribution from credit positioning and a further benefit from credit spread movements. The Fund saw some modest gains from interest rate positioning, reflecting the contribution from duration management. At the sector level, allocations to diversified financials, subordinated banks and real estate were the top performers. There were no detractors. At the security level, exposures to Macquarie Bank, Banco Santander and Suncorp Group were the main contributors. Exposures to Charter Hall Long Wale REIT, AusNet Services Holdings and Westconnex Finance Company were the only material detractors. During the quarter, the Fund participated in primary issuance including but not limited to Commonwealth Bank of Australia, SCA Property Group, Woolworths Group, Firstmac Mortgage Funding Trust 2021-3, Harvey Trust Series 2021-1, Qantas Airways and ElectraNet.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-6.pdfAugust, 2021
The Fund achieved a positive absolute return in August. Domestic credit spreads ended the month almost unchanged against a backdrop of earnings results from the corporate profit reporting season. Results were mostly favourable, with approximately three-quarters of companies reporting increased earnings over the year. Within the banking sector, capital management initiatives featured prominently, highlighting the banks’ currently strong capital positions. At the sector level, allocations to subordinated banks, diversified financials and real estate were the main contributors to performance. There were no material detractors. At the security level, allocations to Macquarie Bank (London), Scentre Group and ABN AMRO Bank were the main contributors to performance.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_h-1-1.pdfJuly, 2021
The Fund achieved a positive absolute return in July.
Domestic credit spreads tightened over the month by one basis point, despite the backdrop of the implementation and subsequent extension of lockdown measures across Greater Sydney. Reduced supply alleviated the pressure on spreads as corporate issuers typically move to the sidelines in the weeks leading up to the profit reporting season At the sector level, allocations to diversified financials and banks, utilities, and securitised investments were the largest contributors to performance. There were no significant detractors. At the security level, allocations to Banco Santander, NAB, Westpac, and Sumitomo Mitsui Financial were the main contributors to performance. Scentre Group, Macquarie Bank, and ABN AMRO were the main detractors.
The Fund participated in primary issues from Banco Santander, DWPF Finance, and CNH Industrial during the month
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_h-2.pdfJune, 2021
The Fund produced a positive absolute return in the June quarter. The Fund had another strong quarter, with narrowing credit spreads continuing to generate returns from credit positioning. It was a better quarter for bond funds in general, with bond yields falling after the jump higher seen in the previous quarter. The Fund saw some modest gains from interest rate positioning, though maintains very low levels of exposure to interest rate moves currently. At the sector level, exposures to banks and financials, real estate, industrials, and securitised assets were the top performers. Exposures to communications, energy, and materials were the main detractors.
At the security level, exposures to Scentre Group, Brisbane Airport, ABN Amro, Macquarie Bank, and Suncorp Group were the main contributors. Exposures to Loy Yang Power and Charter Hall Long Wale REIT were the main detractors. During the quarter, the Fund participated in primary issuance from AGI Finance, BPCE, BNP Paribas, Charter Hall Long Wale REIT, CHC Finance, Lendlease, Transurban, Macquarie Bank, and Bank of Queensland.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-5.pdfMay, 2021
We remain constructive on credit positioning, with excess returns likely to be derived primarily from income. Speculative default rates should peak below 6.5% and fall quickly in line with the expected economic recovery. The improvement to the commodity outlook should help stabilise the negative trajectory of pockets of the energy and mining sectors’ ratings. Vaccine hopes should likely see a bottoming of credit deterioration in the first half of 2021, all of which combined seem supportive for continued sound performance from investment grade credit markets. The Reserve Bank of Australia’s term funding facility has provided a sound backstop for the Australian banks as it significantly reduced the need for the banks to issue into debt markets pushing spreads down to very low levels.
The impact of this will begin to fade as this program runs off in the middle of the year and expectations of a return to more normal issuance patterns return. Despite robust corporate supply, it has not been enough to offset the reduced financial issuance seeing the primary market generally well-supported although increasingly more price sensitive. The bulk of our exposures remains in high quality, shorter-dated credit exposures and we have begun to trade out of longer-dated exposures that have performed strongly.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-4.pdfMarch, 2021
The Fund produced a positive absolute return in the March quarter. The Fund had a strong quarter, with performance primarily being driven by tightening credit spreads over the period, as markets continued to looked ahead to economies opening up as COVID-19 vaccines are distributed in 2021 and a belief central banks will be able to manage any nascent inflationary pressures. Combined with the additional risk premia earned from carry, this meant another strong credit excess return outcome over the quarter. At the sector level, exposures to subordinated banks, industrials and securitised were the top performers. There were no detractors of note. At the security level, exposures to Scentre Group, Brisbane Airport, Qantas, and subordinated debt from NAB and Westpac were the main contributors. Exposures to Aurizon, ETSA Utilities, and Ausgrid were the main detractors. During the quarter, the Fund added to industrials and real estate exposures whilst taking profit on utilities and consumer discretionary exposures within corporates
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-3.pdfFebruary, 2021
The Fund performed in line with it’s benchmark in February. Domestic credit spreads tightened in February against a backdrop of generally favourable results from the corporate profit reporting season. At an overall level, 56% of companies reported higher profits, compared to 36% six months ago. From a credit perspective, notable themes that emerged from the season were reduced bad debt provisions on the part of the banks and strong cash generation at the major miners. The largest upside earnings surprises and upgrades emanated from media companies, banks and retailers, attesting to the cyclical upswing in the Australian economy. At the sector level, allocations across industrials, banks, real estate, securitised assets, and consumer discretionary were the largest contributors to performance. There were no significant detractors. During the month, the Fund participated in primary issues from Svenska Handelsbanken, Charter Hall, and UBS.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-2.pdfJanuary, 2021
The Fund achieved a positive absolute return in January. Gains were led by strong broad-based excess returns across the Fund’s credit exposures. A low level of interest rate exposure in the Fund meant that despite the selloff and steepening of the Australian yield curve over the month, underperformance from the push higher in bond yields was very modest. A recent improvement in the corporate operating environment contributed to a tightening in domestic credit spreads in January. Spreads also benefited from reduced issuance, with a significantly lower volume of funds raised in January compared to previous years. At the sector level, allocations across industrials, financials, securitised investments, real estate and utilities were the largest contributors to performance. There were no detractors. At the security level, exposures to Pacific National Finance, Brisbane Airport, Banco Santander, Sumitomo Mitsui Financial and Suncorp were the largest contributors to performance. There were no detractors.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a-1.pdfDecember, 2020
The Fund produced a positive absolute return in the December quarter. Australian credit spreads tightened over the quarter, with bank credits in particular continuing to benefit from the extension of the Reserve Bank of Australia’s Term Funding Facility in early September.
Credit sentiment has been further bolstered by the easing of lockdown restrictions in Victoria, and the consequent boost to the retail and hospitality sectors. At the sector level, the better performers over the quarter were industrials, real estate, banks and diversified financials, and consumer discretionary.
At the security level, exposures to Brisbane Airport, Qantas Airways, Pacific National Finance, and Scentre Group were the main contributors. Exposures to Lloyd’s Banking Group, Driver Australia, National RMBS, and Australian Personal Loans were the main detractors. We have increased our participation in longerdated primary issuance in recent months on a selective basis, looking to take advantage of wider credit spreads and elevated credit default and liquidity premia
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_a.pdfNovember, 2020
Australian credit spreads tightened materially in November, spurred on by favourable foreign and domestic news flow. The boost to economic sentiment from favourable COVID-19 vaccine test results was reinforced by the prospect of closure regarding the US presidential election.
Domestically, the lifting of lockdown restrictions in Victoria and South Australia, and a partial reopening of interstate borders, has particularly benefited the aviation transport sector.At the sector level, allocations across industrials, real estate and consumer discretionary were the largest contributors to performance.
There were no detractors. At the security level, exposures to Qantas Airways, Brisbane Airport Corporation and Dexus Finance were the largest contributors to performance. There were no significant detractors. During the month, the Fund participated in primary issues from NBN Co, Australian Gas Infrastructure Finance, National Australia Bank, Ampol and Bendigo and Adelaide Ban
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/ffs-why_h-1.pdfOctober, 2020
Performance
The Fund achieved a positive absolute return in October. Australian credit spreads tightened in October, although not quite to the extent of their global peers. Following the Federal Treasurer’s Budget speech on 6 October, increased demand was evident in university and REIT credits, as well as those of airlines and airports as travel restrictions between Australia and New Zealand were eased.
Bank credits extended their recent solid performance, continuing to benefit from the extension of the Reserve Bank of Australia’s Term Funding Facility in early September. Credit sentiment was further bolstered by the easing of lockdown restrictions in Victoria, which will provide boost to the retail and hospitality sectors. At the sector level, allocations across financials (including subordinated) and the real estate and industrial sectors were the largest contributors to performance.
-There were no detractors. At the security level, exposures to Credit Agricole, Qantas Airways, ANZ Banking Group, Westfield, and ABN AMRO Bank were the largest contributors to performance.
-There were no significant detractors. During the month, the Fund participated in primary issues from Charter Hall Prime Industrial Fund and Zip Master Trust 2020-1.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/AMP-CAPITAL-.pdfAugust, 2020
Performance
The Fund had another good month in August, with continued gains in credit driven by credit spread tightening, and with higher bond yields over the month having only a minor impact given the portfolio’s duration remains relatively low. Global credit spreads tightened in August amid encouraging signs from US quarterly corporate profit results. Although earnings were mostly lower, the extent of the decline was substantially less than expected, which provided a boost to market sentiment. Despite progress towards a further US fiscal stimulus package remaining mired in political wrangling and with primary corporate issuance continuing at a robust pace, credit investors were encouraged by stronger than expected US employment data and the rapid pace of recovery in the housing market. At the sector level, allocations to industrials, subordinated banks and real estate were the largest contributors to performance. There were no detractors. At the security level, exposures to BHP Billiton, Credit Suisse and Macquarie Bank were the largest contributors to performance. An exposure to Credit Agricole was the only material detractor. During the month, the Fund participated in primary issues from ANZ, Suncorp, Aurizon Network, Coles, and Goodman Australia.
ticker: AMP0557AU
commentary_block: Array
factsheet_url:
https://www.macquarieim.com/resources/fund-performance-reports#fixedIncome
under Fixed Income. or try the direct link below
https://mim.fgsfulfillment.com/download.aspx?sku=MCOM-MCORPBA-ANZ
release_schedule: Monthly
fund_features:
The AMP Capital Corporate Bond Fund aims to deliver regular monthly income, whilst seeking to provide capital stability to investors over the medium term. To provide total returns (primarily income with some capital growth) above the Fund’s benchmark over a rolling 3-year basis.
- It is a reasonable option for investors seeking diversified Australian credit exposure, but multiple changes over a prolonged period make it hard to recommend.
- Opportunistic high-yield exposures and global credit opportunities have been added over the past several years to enhance returns, although it’s not clear whether AMP Capital has an edge in this space relative to peers.
- As of 31 Dec 2019, duration is roughly half a year, typical for this strategy, reflecting its cash benchmark.
manager_contact_details: Array
asset_class:
asset_category:
peer_benchmark:
broad_market_index:
structure: Managed Fund