September, 2023
The Bentham Global Income Fund had a total return (after fees) of -0.48% in the month of September, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.12%. On a before fees basis the fund returned -0.43% for the month, outperforming the benchmark by 0.17%.
Investment markets underperformed in September as a combination of resilient economic data (primarily in the US) and sticky inflation data prompted investors to price in a “higher cash rates for longer” scenario. Subsequently, bond yields generally increased (prices lower) and equity markets had negative returns. Interest rate sensitive sectors such as property and technology underperformed.
The top contributors to performance included Collateralised Loan Obligations (CLO), Asset Backed Securities (ABS) and Capital Securities; whilst the bottom performing contributors included Global Syndicated Loans, Investment Grade Credit and Global High Yield.
We remain cautious on the investment return outlook because the impact of the globally synchronised rapid interest rate hikes is yet to fully realised. We expect the negative impact of rate hikes to occur with a longer lag than previous rate hike cycles because the extraordinary government stimulus from Covid is still temporarily supporting growth. In addition, we expect tighter credit standards and increased capital costs for banks to weigh on economic growth. Higher rates are having a mixed impact on the household sector, leveraged households are spending less while household savers are benefitting from higher interest income.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20230930-GIF-Monthly-Report-1.pdfAugust, 2023
The Bentham Global Income Fund had a total return (after fees) of 0.77% in the month of August, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.21%. On a before fees basis the fund returned 0.83% for the month, outperforming the benchmark by 0.28%.
Investment market returns were mixed in the month of August amid concerns over renewed weakness in the Chinese real estate sector and hawkish comments from Federal Reserve Chair Jerome Powell at the annual Jackson Hole symposium. Equity markets traded lower while Government bond markets and credit markets outperformed.
The top contributors to performance included Global Syndicated Loans, Collateralised Loan Obligations (CLO) and Capital Securities; whilst the bottom performing contributors included Asset Backed Securities (ABS), Global Hybrids and Bond.
We remain cautious on the investment outlook because the impact of the globally synchronised rapid interest rate hikes is yet to fully realised. We expect the negative impact of rate hikes to occur with a longer lag than previous rate hike cycles because the extraordinary stimulus from Covid is still temporarily supporting growth. In addition, we expect tighter credit standards and increased capital costs for banks to weigh on economic growth. Higher rates are having a mixed impact on the household sector, leveraged households are spending less while household savers are benefitting from higher interest income.
In fixed income markets we are anticipating a short-term risk of increased credit spreads. However, elevated credit spreads in some credit sectors provide a reasonable income buffer against any increases in credit spreads. Government bond yields may be close to their cyclical peak and beginning to trend lower as the cash rate hiking cycle appears to be coming to an end.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20230831-GIF-Monthly-Report.pdfJuly, 2023
The Bentham Global Income Fund had a total return (after fees) of 1.03% in the month of July, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.58%. On a before fees basis the fund returned 1.09% for the month, outperforming the benchmark by 0.64%.
Investment markets were generally higher over the month with improving inflation data and resilient economic growth improving the odds of a soft landing in the US. Both the US Federal Reserve (Fed) and the European Central Bank (ECB) raised rates by 0.25% in line with expectations with forward-looking indicators suggesting rates are now close to their peak for the cycle. Both equity and credit markets were higher with emerging markets outperforming.
The top contributors to performance included Capital Securities, Global Syndicated Loans and Investment Grade Credit; whilst the bottom performing contributors included Bond, Residential Mortgage Backed Securities (RMBS) and Asset Backed Securities (ABS).
We remain cautious on the outlook because we believe the impacts of the rapid increase in interest rates will occur with longer and variable lags. Higher rates have not fully impacted the real economy. In addition, we expect tightened credit standards and increased capital costs for banks will weigh on the economy. We anticipate the risk that credit spreads may increase, albeit already from their currently elevated levels, and government bond yields may benefit (fall) as inflation continues to fall from elevated levels. In our multi-sector credit portfolios, we have more interest rate duration and still maintain a defensive credit exposure positioning.
Interest rates and bonds offer their best value in the last 23 years relative to equities. We are less worried about the last one or two interest rate increase and more worried about the impact on the economy of the last 20 rate rises.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20230731-GIF-Monthly-Report-1.pdfJune, 2023
The Bentham Global Income Fund had a total return (after fees) of -2.11% in the month of June, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.28%. On a before fees basis the fund returned -2.08% for the month, underperforming the benchmark by 1.25%.
Investment markets were mixed in June amid persistent inflation and a more hawkish narrative from Central Banks. Equity markets trended higher (led by the AI tech sector); credit spreads were flat to tighter while Government bond markets were lower on higher interest rates. Australia’s yield curve inverted for the first time since the GFC, mirroring the US and New Zealand as investors price in a difficult 2024 for the local economy.
The top contributors to performance included Asset Backed Securities (ABS), Global Syndicated Loans and Collateralised Loan Obligations (CLO); whilst the bottom performing contributors included Capital Securities, Investment Grade Credit and Global Hybrids.
We remain cautious on the outlook because we believe the impacts of the rapid increase in interest rates will occur with longer and variable lags. Higher rates have not fully impacted the real economy. In addition, we expect tightened credit standards and increased capital costs for banks will weigh on the economy. We anticipate the risk that credit spreads may increase, albeit already from their currently elevated levels, and government bond yields may benefit (fall) as inflation continues to fall from elevated levels. In our multi-sector credit portfolios, we have more interest rate duration and still maintain a defensive credit exposure positioning.
Interest rates and bonds offer their best value in the last 23 years relative to equities. We are less worried about the last one or two interest rate increase and more worried about the impact on the economy of the last 20 rate rises. We have dry powder to put to work when market opportunities present themselves. The deleveraging or right sizing of debt will eventually be more positive for credit markets than equities.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20230630-GIF-Monthly-Report.pdfMay, 2023
The Bentham Global Income Fund had a total return (after fees) of -1.72% in the month of May, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.26%. On a before fees basis the fund returned -1.65% for the month, underperforming the benchmark by 1.20%.
Investment markets were mixed in May amid varied economic signals, sticky inflation data and a more hawkish tone from major central banks. Equities were flat, with broad based weakness offset by strength in the tech sector and positive sentiment relating to AI. Bond and credit markets were generally weaker.
The top contributors to performance included Collateralised Loan Obligations (CLO), Residential Mortgage Backed Securities (RMBS) and Bond; whilst the bottom performing contributors included Asset Backed Securities (ABS), Global Syndicated Loans and Investment Grade Credit.
We remain cautious on the outlook because we believe the impacts of the rapid increase in interest rates will occur with longer and variable lags. Higher rates have not fully impacted the real economy. In addition, we expect tightened credit standards and increased capital costs for banks will weigh on the economy. We anticipate the risk that credit spreads may increase, albeit already from their currently elevated levels, and government bond yields may benefit as inflation continues to fall from elevated levels. In our multi-sector credit portfolios, we have increased the interest rate duration and still maintain a defensive credit exposure positioning.
Market concerns of potential economic weakness have seen credit markets weaken over the past year, with credit spreads increasing significantly. The higher credit spreads are now well above 10-year averages and currently provide an additional running yield buffer against further market weakness, and we believe that the higher overall yield provides for a favourable income profile.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20230531-GIF-Monthly-Report-Final.pdfApril, 2023
The Bentham Global Income Fund had a total return (after fees) of 0.91% in the month of April, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.65%. On a before fees basis the fund returned 0.99% for the month, outperforming the benchmark by 0.74%.
The top contributors to performance included Global Syndicated Loans, Capital Securities and Collateralised Loan Obligations (CLO); whilst the bottom performing contributors included Equity Securities, Bond and Residential Mortgage Backed Securities (RMBS).
Investment markets were stronger in April, boosted by growing optimism that Central Banks are near the end of the rate hike cycle and inflation has peaked. Fixed Income and credit markets registered gains, while the banking sector remained volatile, US regional banks specifically.
Economic data remained resilient in the face of growing pressures, while falling energy prices and signs of moderating wage growth eased concerns over inflation. Nonetheless, the collapse of First Republic and ultimate sale to JP Morgan showed the fallout of Central Bank tightening is continuing to have consequences and the long and variable lag of the fast-paced rake hikes has more the play out.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20230430-GIF-Monthly-Report.pdfMarch, 2023
The Bentham Global Income Fund had a total return (after fees) of 0.50% in the month of March, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.22%. On a before fees basis the fund returned 0.57% for the month, underperforming the benchmark by 1.15%.
Investment markets had mixed returns in March as government bonds markets and the broader equity market outperformed, while bank shares and some segments of credit markets underperformed.
The top contributors to performance included Investment Grade Credit, Global High Yield and Asset Backed Securities (ABS); whilst the bottom performing contributors included Capital Securities, Global Syndicated Loans and Global Hybrids.
We remain cautious on the outlook because the rapid increase in interest rates will have a long and variable lag effect on the economy. Higher rates are still to fully impact the real economy. In addition, tightened credit standards and increased capital for banks will weight on the economy. We anticipate the risk that credit spreads may increase, albeit already from their currently elevated levels, and government bond yields to continue to benefit as inflation begins to moderate. In our multi-sector credit portfolios, we have increased the interest rate duration and still maintain a defensive credit exposure positioning.
Market concerns of potential economic weakness have seen credit markets weaken over the past year, with credit spreads increasing significantly. The higher credit spreads are now well above 10-year averages and currently provide an additional running yield buffer against further market weakness, and we believe that the higher overall yield provides for a favourable income profile.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/2023031-GIF-Monthly-Report.pdfFebruary, 2023
The Bentham Global Income Fund had a total return (after fees) of -1.46% in the month of February, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.92%. On a before fees basis the fund returned -1.42% for the month, underperforming the benchmark by 0.88%.
After a strong January, investment markets were weaker in February as investors reassessed the outlook for interest rates with Central Banks suggesting the peak in rates may be some way off. The Federal Reserve, European Central Bank and Bank of England all raised rates during the month, as did the RBA which hiked by another 0.25% to 3.60%.
The top contributors to performance included Collateralised Loan Obligations (CLO), Residential Mortgage Backed Securities (RMBS) and Bond; whilst the bottom performing contributors included Asset Backed Securities (ABS), Capital Securities and Investment Grade Credit.
We remain cautious because the long and variable lagged impact of much higher interest rate which are still to impact the real economy at which point, we anticipate the risk that credit spreads may increase, albeit already from their currently elevated levels, and government bond yields to benefit. In our multi-sector credit portfolios, we have increased the interest rate duration and still maintain a defensive credit exposure positioning.
Market concerns of potential economic weakness have seen credit markets weaken over the past year, with credit spreads increasing significantly as traded credit markets have actively repriced. The higher implied credit spreads are now well above 10-year averages and currently provide an additional running yield buffer against further market weakness, and we believe that the higher overall yield provides for a favourable income profile.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20230228-GIF-Monthly-Report-Final.pdfJanuary, 2023
The Bentham Global Income Fund had a total return (after fees) of 4.09% in the month of January, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 2.58%. On a before fees basis the fund returned 4.15% for the month, outperforming the benchmark by 2.65%.
Investment markets registered strong gains in January on boosted hopes that Central Bank cash rates may peak in the first half of 2023. Global inflation indicators eased below expectations and US Fed Reserve comments foreshadowed a slower pace of rate hikes and/or a pause. The economic outlook has also improved with news that the reopening of the Chinese economy from COVID restrictions has occurred quicker than expected.
The top contributors to performance included Capital Securities, Global Syndicated Loans and Investment Grade Credit; whilst the bottom performing contributors included Equity Securities, Residential Mortgage Backed Securities (RMBS) and Bond.
Although investment markets had a strong performance in January, we remain cautious because of the long and variable lagged impact of much higher interest rates which are yet to impact the real economy. At this point, we anticipate the risk that credit spreads may increase (albeit already from their currently elevated levels) and government bond yields to benefit. In our multi-sector credit portfolios, we have increased the interest rate duration and still maintain defensive credit exposure positioning.
Although investment markets had a strong performance in January, we remain cautious because of the long and variable lagged impact of much higher interest rates which are yet to impact the real economy. At this point, we anticipate the risk that credit spreads may increase (albeit already from their currently elevated levels) and government bond yields to benefit. In our multi-sector credit portfolios, we have increased the interest rate duration and still maintain defensive credit exposure positioning.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20230131-GIF-Monthly-Report.pdfDecember, 2022
The Bentham Global Income Fund had a total return (after fees) of -1.39% in the month of December, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.48%. On a before fees basis the fund returned -1.35% for the month, underperforming the benchmark by 0.44%.
December finished off 2022 the annus horribulis for bond and equity investors alike when the barbell approach temporarily broke-down. Floating rate credit, while broadly wider on the year, was useful during this period faring more favourably than Government Bonds and Equities which both posted double digit losses. Floating rate credit losses were modest and generally low single digits.
The top contributors to performance included Capital Securities, Collateralised Loan Obligations (CLO) and Asset Backed Securities (ABS); whilst the bottom performing contributors included Global Syndicated Loans, Global Hybrids and Investment Grade Credit.
Whilst cash rates will continue to increase, yield curves are starting to invert in the US, Europe and UK as markets anticipate peak long-term rates. Our strategy has been to add interest rate duration in economies where households have a high sensitivity to the projected rate rises. In our multi-sector credit portfolios, we remain active on managing interest rate risk and have increased our interest rate duration further and reduced credit risk in anticipation of a slowing economy. We wait for the long and variable lagged impact of monetary policy and possibly wider credit spreads.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20221231-GIF-Monthly-Report.pdfNovember, 2022
The Bentham Global Income Fund had a total return (after fees) of 2.98% in the month of November, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 2.08%. On a before fees basis the fund returned 3.05% for the month, outperforming the benchmark by 2.15%.
The top contributors to performance included Asset Backed Securities (ABS), Capital Securities and Collateralised Loan Obligations (CLO); whilst the bottom performing contributors included Global Syndicated Loans, Equity Securities and Residential Mortgage Backed Securities (RMBS).
In November 2022, the global fixed income and credit market performed well, with many investors (including ourselves) taking advantage of higher interest rate to buy long-duration bonds. The possibility of a recession, which has been a concern for many investors, seemed to recede as the global economy continued to expand, with a number of positive economic indicators, including strong job growth and a steady increase in consumer spending. Further support for shares came from signs of China loosening its strict Covid rules which have weighed on economic activity.
Whilst cash rate will continue to increase, yield curves are starting to invert in the US, Europe and UK as market anticipate peak long-term rates. Our strategy has been to add interest rate duration in economies where households have a high sensitivity to the projected rate rises. In our multi-sector credit portfolios, we remain active on managing interest rate risk and have increased our interest rate duration further and reduced credit risk in anticipation of a slowing economy. Whilst we wait for the long and variable lagged impact of monetary policy and possibly wider credit spreads.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20221130-GIF-Monthly-Report.pdfOctober, 2022
The Bentham Global Income Fund had a total return (after fees) of 0.46% in the month of October, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.13%. On a before fees basis the fund returned 0.56% for the month, underperforming the benchmark by 0.03%.
October was a positive month for global investment markets as a better-than-expected CPI print in the US triggered a market rally and prompted a moderation in the strength of the US dollar. Global equity indices rebounded from their falls in September while global fixed income and credit market returns were mixed. The Bentham Funds had positive returns in the month. US Economic data was mixed in the month.
The top contributors to performance included Capital Securities, Global Syndicated Loans and Global High Yield; whilst the bottom performing contributors included Residential Mortgage Backed Securities (RMBS), Equity Securities and Bond.
Whilst cash rates will continue to increase, yield curves are starting to invert in the US, Europe and UK as the market anticipates a peak in long-term rates. Our strategy has been to add interest rate duration in economies where households have a high sensitivity to the projected rate rises. In our multi-sector credit portfolios, we remain active on managing interest rate risk and have increased our interest rate duration further. We have also reduced credit risk in anticipation of a slowing economy whilst we wait for the long and variable lagged impact of monetary policy.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20221031-GIF-Monthly-Report.pdfSeptember, 2022
The Bentham Global Income Fund had a total return (after fees) of -2.32% in the month of September, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.72%. On a before fees basis the fund returned -2.27% for the month, underperforming the benchmark by 1.66%.
September was another negative month of performance across global investment markets. Global equity indices suffered sharp price falls while fixed income markets underperformed as both government bond yields and credit spreads increased. Bentham funds had negative returns as they were impacted by negative markets.
The top contributors to performance included Residential Mortgage Backed Securities (RMBS), Equity Securities and Bond; whilst the bottom performing contributors included Global Syndicated Loans, Capital Securities and Investment Grade Credit.
The recent increase in government bond yields and a steepening of the yield curve was not a surprise, and we caution that bond yields may not yet have peaked. Our strategy has been to add interest rate duration in economies where households have a high sensitivity to the projected rate rises. We have perhaps already seen an indication of this sensitivity with the RBA’s recent decision to only hike rates at 25bps (some might even consider this a pivot by Martin Place). In our multi-sector credit portfolios, we remain active on managing interest rate risk and have increased our interest rate duration further and reduced credit risk in anticipation of a slowing economy.
Market concerns of potential economic weakness have seen credit markets weaken this year, with credit spreads increasing significantly as traded credit markets have actively repriced. The higher implied credit spreads are now well above 10-year averages and currently provide an additional running yield buffer against further market weakness, and we believe that the higher overall yield provides for a favourable income profile.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220930-GIF-Monthly-Report.pdfAugust, 2022
The Bentham Global Income Fund had a total return (after fees) of -0.50% in the month of August, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.70%. On a before fees basis the fund returned -0.51% for the month, outperforming the benchmark by 0.69%.
August was a negative month of performance for traditional 60:40 balanced portfolios as both equities and bonds underperformed. While global credit markets experienced mixed returns, floating rate credit generally had positive returns while fixed rate credit was dragged lower by higher bond yields. Emerging Market debt out-performing with idiosyncratic risk weighing on European Investment Grade and Bank CoCos.
The top contributors to performance included Global Syndicated Loans, Collateralised Loan Obligations (CLO) and Equity Securities; whilst the bottom performing contributors included Capital Securities, Investment Grade Credit and Asset Backed Securities (ABS).
The recent increase in government bond yields and a steepening of the yield curve was not a complete surprise as we caution that bond yields may not have yet peaked. Our preference is for New Zealand and Australian interest rates duration given the high sensitivity of households with predominantly floating rate debt, and high debt levels are likely to moderate central bank rate rises.
We remain active on managing interest rate risk and will consider increasing interest rate duration further and decreasing our credit duration in anticipation of a slowing economy.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220831-GIF-Monthly-Report.pdfJuly, 2022
The Bentham Global Income Fund had a total return (after fees) of 2.61% in the month of July, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.87%. On a before fees basis the fund returned 2.74% for the month, outperforming the benchmark by 1.01%.
July was a strong month for the performance of bond, equity and credit markets. Credit spreads decreased steadily over the month and government bond yields finished lower, especially in Australia. In terms of market events in July, the Federal Reserve (Fed) hiked interest rates by 75 basis points as expected. In prepared comments, Fed Chairman Powell stated that “the labour market is extremely tight and inflation much too high”.
The top contributors to performance included Global Syndicated Loans, Capital Securities and Global Hybrids; whilst the bottom performing contributors included Asset Backed Securities (ABS), Collateralised Loan Obligations (CLO) and Bond.
However, the market interpreted some of the Fed comments as dovish and markets are now anticipating a slower increase in interest rates followed by rate cuts late next year, which has helped markets rally in July. However, we expect asset prices to remain under pressure as the tighter financial conditions start to negatively impact fundamentals. It does not particularly help that Central Banks are still in the process of tightening monetary conditions globally.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220731-GIF-Monthly-Report-1.pdfJune, 2022
The Bentham Global Income Fund had a total return (after fees) of -2.53% in the month of June, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.82%. On a before fees basis the fund returned -2.43% for the month, underperforming the benchmark by 1.72%.
The month of June continued the pain across markets with equities, bonds, property, and credit broadly weaker. Inflation has the markets under pressure as investors moved to price in further interest rate rises and an increased risk of recession. In recent prints, Unemployment remained low at 3.6% and CPI surging to 9.1%, levels not seen since the 1980’s. Markets are now baking in as much as a 1% hike at the Fed’s next meeting
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220630-GIF-Monthly-Report.pdfMay, 2022
The Bentham Global Income Fund had a total return (after fees) of -1.17% in the month of May, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.75%. On a before fees basis the fund returned -1.08% for the month, underperforming the benchmark by 0.66%. The month of May was challenging for investment markets. Credit spreads increased while Government bonds were mixed with US yields falling and local yields surging higher. The key drivers for markets were concerns over rising inflation, a faster pace of central bank tightening and the impact of the ongoing war in Ukraine.
The top contributors to performance included Capital Securities, Global High Yield and Equity Securities; whilst the bottom performing contributors included Global Syndicated Loans, Investment Grade Credit and Global Hybrids. The US Fed shifted its policy focus to reducing inflationary pressures despite signs of slowing growth. US GDP was confirmed to have contracted in Q1 while US CPI remains at peak levels of 8.6% (YoY 31-May-22) and is yet to recede as previously expected.
In terms of positioning for the Bentham’s multi-sector credit funds, we have continued to reduce credit duration and added to our interest rate duration which reflects a more defensive position.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220531-GIF-Monthly-Report.pdfApril, 2022
The Bentham Global Income Fund had a total return (after fees) of -0.29% in the month of April, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.46%. On a before fees basis the fund returned -0.19% for the month, outperforming the benchmark by 0.56%.
April was another challenging month for investment markets as bond yields continued to rise on more hawkish comments from central banks. In addition, market sentiment was negatively impacted by the continuing Russian invasion of Ukraine and the widening Covid lockdown in China. The top contributors to performance included Collateralised Loan Obligations (CLO), Asset Backed Securities (ABS) and Residential Mortgage Backed Securities (RMBS); whilst the bottom performing contributors included Capital Securities, Investment Grade Credit and Global High Yield.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220430-GIF-Monthly-Report.pdfMarch, 2022
The Bentham Global Income Fund had a total return (after fees) of 0.86% in the month of March, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 2.74%. On a before fees basis the fund returned 0.92% for the month, outperforming the benchmark by 2.81%.
March was another challenging month for Fixed Interest investors with bond rates rising on more hawkish rhetoric from the Fed and the first US rate hike of this cycle. The US market is now pricing another 8.5 rate hikes of 25bps by the end of 2022 (or 2.13%). Additionally, markets continued to digest the impact of the Russian invasion of Ukraine and Covid lockdowns in China, both of which are inflationary.
Bentham’s multi-sector funds benefitted from the outright short interest rate duration position. As rates sold off late in the month we took profits and pared back the rates position. We would note that we now have essentially flat interest rate duration in the Bentham Global Income Fund. While credit spreads widened over the quarter, they tightened over the month of March (apart from securitised market).
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220331-GIF-Monthly-Report.pdfFebruary, 2022
The Bentham Global Income Fund had a total return (after fees) of 0.07% in the month of February, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.67%. On a before fees basis the fund returned 0.12% for the month, outperforming the benchmark by 0.73%. The end of February saw the commencement of the war between Russia the Ukraine, with few places for investors to hide in financial markets. Early in the month, Bonds and Equities both sold-off due to inflation fears. At the end of the month volatility spiked due to concerns about the Russia-Ukraine Geopolitical situation sending credit spreads wider.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220228-GIF-Monthly-Report.pdfJanuary, 2022
The Bentham Global Income Fund had a total return (after fees) of 0.67% in the month of January, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.18%. On a before fees basis the fund returned 0.73% for the month, outperforming the benchmark by 1.23%. January was a challenging start of the year for investors. There were not many investments that offered shelter from the volatility as inflation numbers soared and the US Fed indicated rates would start rising earlier than expected. Equities and government bond markets sold-off in tandem and were positively correlated. While Credit market experienced a mixed month, as fixed rate credit underperformed in the month, the only refuge for positive returns was floating rate ABS and Loans markets.
The top contributors to performance included Global Syndicated Loans, Collateralised Loan Obligations (CLO) and Asset Backed Securities (ABS); whilst the bottom performing contributors included Capital Securities, Investment Grade Credit and Global High Yield. After a strong rebound of global economic growth in 2021, we expect this growth to moderate in 2022 as central banks begin withdrawing monetary stimulus given elevated inflation risk. Credit market fundamentals remain sound on average with brokers and credit rating agencies forecasting default rates to remain well below historical averages. Companies are, however, likely to be facing short-term supply chain issues, tight labour markets and lingering pandemic interruptions. COVID appears to be in retreat and the world is beginning to reopen. Economic fundamentals are already strong with unemployment low, wages increasing, and prices creating the perfect backdrop for coordinated central bank hikes for the rest of the year across developed markets.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20220131-GIF-Monthly-Report.pdfDecember, 2021
The Bentham Global Income Fund had a total return (after fees) of 0.70% in the month of December, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.65%. On a before fees basis the fund returned 0.79% for the month, outperforming the benchmark by 0.74%.
Global corporate credit markets finished 2021 on a high note as credit spreads tightened across the board in December. Credit and equity markets rebounded in December after the emergence of the highly infectious Omicron variant in late November turned out to be less severe than initially indicated. The top contributors to performance included Global Syndicated Loans, Capital Securities and Global High Yield; whilst the bottom performing contributors included Equity Securities, Residential Mortgage Backed Securities (RMBS) and Bond.
After a strong rebound of global economic growth in 2021, we expect this growth to moderate in 2022 as central banks begin withdrawing monetary stimulus given elevated inflation risk. Credit market fundamentals remain sound on average with brokers and credit rating agencies forecasting default rates to remain well below historical averages. Companies are, however, likely to be facing short-term supply chain issues, tight labour markets and lingering pandemic interruptions.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20211231-GIF-Monthly-Report.pdfNovember, 2021
The Bentham Global Income Fund had a total return (after fees) of -0.20% in the month of November, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.24%. On a before fees basis the fund returned -0.14% for the month, underperforming the benchmark by 1.18%.
The top contributors to performance included Investment Grade Credit, Global Syndicated Loans and Asset Backed Securities (ABS); whilst the bottom performing contributors included Capital Securities, Global High Yield and Equity Securities
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20211130-GIF-Monthly-Report.pdfOctober, 2021
The Bentham Global Income Fund had a total return (after fees) of 0.15% in the month of October, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.94%. On a before fees basis the fund returned 0.19% for the month, outperforming the benchmark by 1.98%.
It was a Red October for Government bonds as yields rose dramatically, particularly in Australia. Credit spreads were relatively stable and floating rate credit markets outperformed fixed rate credit markets. Global equity markets were generally positive over the month, with the ASX being the one exception. The local AusBond Composite Bond Index returned –3.55% in the month and -5.34% over the last 12 months, closing the month at a yield of 1.70%.
The top contributors to performance included Collateralised Loan Obligations (CLO), Equity Securities and Residential Mortgage Backed Securities (RMBS); whilst the bottom performing contributors included Capital Securities, Investment Grade Credit and Global High Yield
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20211031-GIF-Monthly-Report.pdfSeptember, 2021
The Bentham Global Income Fund had a total return (after fees) of 0.52% in the month of September, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.27%. On a before fees basis the fund returned 0.58% for the month, outperforming the benchmark by 1.34%.
September was a negative month for global stock and government bond markets. Floating rate credit markets and the Bentham Funds were among the few sectors to generate positive returns.
The top contributors to performance included Global Syndicated Loans, Collateralised Loan Obligations (CLO) and Asset Backed Securities (ABS); whilst the bottom performing contributors included Investment Grade Credit, Bank Capital Securities and Global Hybrids
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20210930-GIF-Monthly-Report.pdfAugust, 2021
The Bentham Global Income Fund had a total return (after fees) of 0.36% in the month of August, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.32%. On a before fees basis the fund returned 0.43% for the month, outperforming the benchmark by 0.38%.August was a mostly quiet month in markets with much of the Northern Hemisphere enjoying late summer holidays and policy makers focused on Jackson Hole.
The top contributors to performance included Global Syndicated Loans, Bank Capital Securities and Global High Yield; whilst the bottom performing contributors included Investment Grade Credit, Equity Securities and Global Hybrids.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20210831-GIF-Monthly-Report.pdfJuly, 2021
The Bentham Global Income Fund had a total return (after fees) of -0.25% in the month of July, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.13%. On a before fees basis the fund returned -0.21% for the month, underperforming the benchmark by 1.09%.
July was a mixed month for global credit and equity markets. Concerns of rising Covid-19 Delta variant cases despite high vaccination rates in Europe and the US has created a widespread ripple effect across financial markets in July. The top contributors to performance included Investment Grade Credit, Bank Capital Securities and Global Syndicated Loans; whilst the bottom performing contributors included Bond, Residential Mortgage Backed Securities (RMBS) and Global High Yield
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20210731-GIF-Monthly-Report.pdfJune, 2021
The Bentham Global Income Fund had a total return (after fees) of 0.05% in the month of June, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.30%. On a before fees basis the fund returned 0.13% for the month, underperforming the benchmark by 0.22%.
The top contributors to performance included Bank Capital Securities, Investment Grade Credit and Global Syndicated Loans; whilst the bottom performing contributors included Bond, Asset Backed Securities (ABS) and Residential Mortgage Backed Securities (RMBS).
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/GIF-Monthly-Report.pdfMay, 2021
The Bentham Global Income Fund had a total return (after fees) of 0.05% in the month of May, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.09%. On a before fees basis the fund returned 0.08% for the month, underperforming the benchmark by 0.06%.
An interesting investment market dynamic in May was the strength of US government bonds despite consumer price inflation (CPI) data coming in at above expectations. CPI prints are now at their highest level since mid 2008 and prior to that the early 1990’s. Markets believe the CPI rises maybe just transitionary and will return to lower CPI post spikes from bottlenecks in the supply chains. Bond prices rose reflecting after falls in the first quarter
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20210531-GIF-Monthly-Report.pdfApril, 2021
The Bentham Global Income Fund had a total return (after fees) of -0.12% in the month of April, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.40%. On a before fees basis the fund returned -0.06% for the month, underperforming the benchmark by 0.34%.
April was a relatively uneventful month with most risk markets up and most government bonds rallying ever so slightly after a tumultuous Q1. The pace of vaccination and fiscal stimulus measures continue to create optimism on the economic outlook throughout developed economies.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20210430-GIF-Monthly-Report.pdfMarch, 2021
The Bentham Global Income Fund had a total return (after fees) of 1.40% in the month of March, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.99%. On a before fees basis the fund returned 1.40% for the month, outperforming the benchmark by 1.00%.
March saw a continuation of the increase in bond yields globally as market concerns turned to reflation. This created the worst quarter returns for bonds since 1994. For Q1 2021 Global government bonds lost -3.4%, investment grade credit - 4.7% and Emerging market bonds -7.3%. US 10-year bond yields increased by 0.84% for the quarter (0.34% in March). The US 10-year yield ended March at 1.74%. Global equities advanced (with some markets hitting record highs), as did corporate bond markets and commodities.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20210331-GIF-Monthly-Report.pdfFebruary, 2021
The Bentham Global Income Fund had a total return (after fees) of 0.92% in the month of February, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 2.72%. On a before fees basis the fund returned 0.94% for the month, outperforming the benchmark by 2.74%.
Markets are starting to price in higher bond yields, with investors coming to terms with the possibility that US GDP and inflation could bounce back faster than predicted at the beginning of the year. This is not a normal recovery from a recession. The market is sensing potential GDP growth north of 5% as Covid sensitive industries wake from hibernation. On top of that is the combination of Government fiscal and central bank monetary stimulus. There is the potential for cost push and demand pull on inflation (north of 4.5% in the US for calendar 2021). The top contributors to performance included Global Syndicated Loans, Collateralised Loan Obligations (CLO) and Asset Backed Securities (ABS); whilst the bottom performing contributors included Investment Grade Credit, Global Hybrids and Equity Securities.
Market valuations have been heavily influenced by coordinated monetary and fiscal policy leading to higher asset prices in equities and government bonds while credit spreads remain within the confines of historical norms. We expect large increases in activity as Covid savings borne from government stimulus creates demand. This is magnified when combined with the jump in activity that will ensue from the return of halted industries afflicted by Covid.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20210228-GIF-Monthly-Report.pdfJanuary, 2021
The Bentham Global Income Fund had a total return (after fees) of 0.95% in the month of January, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.16%. On a before fees basis the fund returned 0.99% for the month, outperforming the benchmark by 1.20%.
January was a mixed month for markets with Emerging Markets and Commodities generally outperforming developed economies. Government bonds also sold-off broadly, while credit was mixed with most floating rate assets generating positive excess returns. Markets were able to remain optimistic around the vaccine execution and were paradoxically more optimistic about the potential Covid stimulus.
The top contributors to performance included Global Syndicated Loans, Asset Backed Securities (ABS) and Collateralised Loan Obligations (CLO); whilst the bottom performing contributors included Investment Grade Credit, Equity Securities and Global Hybrids.
The outlook for 2021 started with the election of a new US government administration. There was also a resolution of the Brexit deal and the beginnings of a global rollout of Covid-19 vaccinations. Corporates proved to be much more resilient in 2020 in handling the Covid-19 activity disruption than initially expected. However, corporate earnings in some sectors remain challenged by Covid-19 related restrictions, global trade barriers and potentially additional regulations. Market valuations have been heavily influenced by coordinated monetary and fiscal policy leading to higher asset prices in equities and government bonds while credit spreads remain within the confines of historical norms.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20210131-GIF-Monthly-Report.pdfDecember, 2020
The Bentham Global Income Fund had a total return (after fees) of 1.24% in the month of December, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 1.37%. On a before fees basis the fund returned 1.26% for the month, outperforming the benchmark by 1.39%.
The year ended (at very long last) with continued strong market performance and despite the escalation of COVID cases and lockdowns in parts of Europe. Markets rallied with the first vaccinations being rolled out in the UK and US as investors looked towards the return to normality at some point in 2021. The US election result was also positive for markets with the Democrats, led by Joe Biden, winning the US Presidency and ultimately control of the Senate.
The top contributors to performance included Investment Grade Credit, Global Syndicated Loans and Bank Capital Securities; whilst the bottom performing contributors included Residential Mortgage Backed Securities (RMBS), Equity Securities and Global Hybrids.
With the start of the new calendar year comes a new administration, Brexit done and dusted, and hope for global vaccinations putting Covid to bed. This along with global coordinated monetary and fiscal policy has had equity and bond Markets fizzed up. Yet, we note that credit is not dependant on central banks or politicians, nor on earnings growth or dividends that have the potential to be cut. Credit sits high in the capital structure, protected by equity/shares. Credit risk premiums will likely provide an increasingly important way of achieving a positive real return in a potentially low return environment. The starting point for government bond yields is low and below the current inflation rate.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20201231-GIF-Monthly-Report.pdfNovember, 2020
The Bentham Global Income Fund had a total return (after fees) of 2.31% in the month of November, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 2.36%. On a before fees basis the fund returned 2.32% for the month, outperforming the benchmark by 2.37%. November was a strong month for credit with renewed optimism surrounding COVID vaccinations dominating headlines. Bonds were volatile and mixed for the month will corporate credit broadly rallying.
Equity markets similarly sizzled along with cryptocurrency. In November we learned that Janet Yellen would be returning, this time to try her hand at Fiscal policy, as the US Treasury Secretary under the new Biden administration. While vaccine headlines dominated the month the global backdrop for COVID remains concerning as major cities across the Northern Hemisphere and we still might have to wait sometime for deployment of vaccines to occur globally. The top contributors to performance included Global Syndicated Loans, Bank Capital Securities and Investment Grade Credit; whilst the bottom performing contributors included Global High Yield, Residential Mortgage Backed Securities (RMBS) and Equity Securities. We are all hoping for a swift conclusion to the COVID crisis in 2021 from vaccinations.
While research has seen positive developments in vaccine testing, anti-viral and more effective indirect therapies, it is the extraordinary Fiscal and Monetary policy which was rapidly deployed that is bridging the activity deficit. Still to come is the US Senate run-off in Georgia in January which will determine the efficacy of the new Biden administration to enact progressive policy.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20201130-GIF-Monthly-Report.pdfOctober, 2020
The Bentham Global Income Fund had a total return (after fees) of 0.88% in the month of October, outperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.73%. On a before fees basis the fund returned 0.87% for the month, outperforming the benchmark by 0.73%.
The market rally waned in October, with concerns over rolling lock-downs due to second and third virus infection waves and the pending US election prompting a more cautious approach from investors. Returns were relatively subdued, with US Equities and Bonds slightly weaker and credit markets generally stronger. The Federal Reserve, for its part, continued its dovish tone reiterating that rates will remain low for the foreseeable future. Market participants and even the Federal Reserve are still hopeful for additional fiscal stimulus.
The top contributors to performance included Global Syndicated Loans, Investment Grade Credit and Bank Capital Securities; whilst the bottom performing contributors included Equity Securities, Residential Mortgage Backed Securities (RMBS) and Global Hybrids.
There is a surprisingly high level of confidence given the economic backdrop. Countries around the world are now implementing their own strategies to get back to normal, while dealing with the second wave of Covid infections. While research has seen positive developments in vaccine testing, anti-viral and more effective indirect therapies, it is the extraordinary Fiscal and Monetary policy which was rapidly deployed that is bridging the activity deficit. The US Election is not quite in the rear-view mirror with the Georgia senate race poised to decide the US Senate in January
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20200930-GIF-Monthly-Report.pdfSeptember, 2020
The Bentham Global Income Fund had a total return (after fees) of 0.43% in the month of September, underperforming the benchmark (50% Bloomberg AusBond Bank Bill Index, 50% Bloomberg AusBond Composite Index) by 0.11%. On a before fees basis the fund returned 0.42% for the month, underperforming the benchmark by 0.12%. The month of September saw the first monthly sell-off in Equity market since March with most credit spreads marginally wider with the notable exception of loans (our largest exposure). Globally, the risk remains for another COVID-related shut down in the Northern Hemisphere as temperatures cool and infection rates rise. A number of countries are firmly in a second wave of COVID, albeit with a lesser death-toll to date. The top contributors to performance included Global Syndicated Loans, Collateralised Loan Obligations (CLO) and Investment Grade Credit; whilst the bottom performing contributors included Bank Capital Securities, Global Hybrids and Equity Securities. There is a surprisingly high level of confidence given the economic backdrop. Countries around the world are now implementing their own strategies to get back to normal, while dealing with second wave of Covid infections. While research has seen positive developments in vaccine testing, anti-viral and more effective indirect therapies, it is the extraordinary Fiscal and Monetary policy which was rapidly deployed that is bridging the activity deficit We are now 21 days from the US election which has the potential to surprise markets again and potentially remains a risk should neither candidate win with a clear mandate.
File: https://commentary.quantreports.net/wp-content/uploads/2020/10/20200930-GIF-Monthly-Report.pdfticker: CSA0038AU
commentary_block: Array
factsheet_url:
https://www.benthamam.com/funds-and-performance/fund-reports/
release_schedule: Monthly
fund_features:
Bentham Global Income Fund is actively managed and focused on generating stable investment income. The Fund provides diversified exposure to domestic and global credit markets.
- Access to global investment opportunities not typically available to direct retail investors
- Diversified sources of income
- Unique wholesale asset classes with specialist expertise
- Monthly income distributions
- Daily unit pricing
- Australian domiciled trust with more than 15 year’s track record.
manager_contact_details: Array
asset_class: Fixed Income
asset_category: Multi-Strategy Income
peer_benchmark: Fixed Income - Multi-Strat Income Index
broad_market_index: Global Aggregate Hdg Index
structure: Managed Fund