September, 2023
The fund delivered a negative return of -0.9% for the quarter and 2.0% in the year to 30 September 2023 (before fees and tax). The fund outperformed the benchmark return by 0.3% for the quarter and 0.9% over the past year.
Global government bond yields have risen sharply in the past three months in response to inflation concerns. Bond investors appear to have become more cautious given rising oil prices and guidance from various central banks that they were prepared to further raise interest rates and hold them there. This view of “higher for longer” interest rates has also impacted global share markets. By contrast, corporate bonds have been more resilient. The current levels of corporate yields have proven more appealing to investors.
During the September quarter we made some changes to our fixed income strategy, impacting the building blocks used for securitised debt and Australian short duration credit strategies. We believe the changes will provide better risk-adjusted return outcomes and will generate better and more consistent returns for our diversified fund investors in an environment of higher, more normalised, bond yields.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Fund-Profile-Tool-Fund-Commentary-MLC-1.pdfJune, 2023
The fund delivered a negative return of -1.1% for the quarter and 0.7% in the year to 30 June 2023 (before fees and tax). The fund outperformed the benchmark return by 0.5% for the quarter and 0.6% over the past year.
Global government bond yields have risen in the past three months. Better global economic activity and tough talk from central banks on the need to reduce inflation have driven higher bond yields. Investors also preferred global shares over bonds given the mania for ‘Artificial Intelligence’ (AI) technology stocks and a stabilisation in the US banking system after March’s ‘Silicon Valley’ crisis.
Corporate bonds have also benefitted from improving risk appetite with narrower credit spreads. Investors are finding the current corporate yields as now providing attractive income potential compared to recent years.
During the June quarter MLC appointed new managers to the fixed income’s extended credit strategy. We believe the addition of Bentham Asset Management and Stone Harbor Investment Partners will provide better risk-adjusted return outcomes for the fund’s extended credit strategy. These new investment manager strategies have diversity of investment approach, insight, and demonstrated ability at outperforming their market benchmarks.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Fund-Profile-Tool-Fund-Commentary-MLC.pdfDecember, 2022
The fund returned 0.8% for the quarter and -10.4% in the year to 31 December 2022 (before fees and tax). The fund outperformed the benchmark return by +0.2% for the quarter and by +0.5% over the past year.
Global government bond yields managed to stabilize in the final quarter of a very volatile year. There were some encouraging signs that global inflation pressures may have peaked with commodity prices softening and supply disruptions starting to abate. Global economic activity is also slowing, thereby suggesting fading upward pressure on government bond yields.
Corporate bonds also proved more resilient in the final quarter. Notably this stability in credit spreads comes after the sharp widening in spreads for most of 2022 given concerns over the impact of higher interest rates on future corporate profits.
Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.
File:September, 2022
The fund returned -2.2% for the quarter and -11.7% in the year to 30 September 2022 (before fees and tax). The fund performed in line with the benchmark return for the quarter and outperformed by 0.3% over the past year.
Global government bond yields continue to rise sharply given inflation concerns. High commodity prices, persistent supply disruptions and increasing wage pressures have been the key drivers for rising bond yields. The Russian-Ukraine conflict since February 2022 has only intensified these inflation concerns.
Corporate bonds have also proven sensitive to expectations for higher interest rates in coming years, as well as the potential for slower economic activity and reduced corporate profitability. Credit spreads have accordingly widened significantly in response to these negative expectations.
Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Screen-Shot-2022-10-30-at-02.29.10.pngJune, 2022
Performance drivers and positioning of the fund for the recent calendar quarter are explained below. Our investment experts also provide regular investment updates at mlcam.com.au/insights
The fund returned -4.5% for the quarter and -9.5% in the year to 30 June 2022 (before fees and tax). The fund underperformed the benchmark return for the quarter by 0.3% but outperformed by 0.4% over the year.
Global government bond yields have risen sharply over the past three months. Inflation concerns given higher commodity prices and persistent supply disruptions have been the key driver for rising bond yields. The Russian-Ukraine conflict since February 2022 has only intensified these global inflation concerns.
Corporate bonds have also proven sensitive to expectations for higher interest rates in coming years with the potential to slow global growth and reduce corporate profitability.
During the June quarter MLC appointed new bond managers to improve returns and manage risks. These new managers have more flexibility to take market opportunities. Ardea Investment Management and Janus Henderson Investors have been appointed as Australian bond managers in the all maturities strategy, and we’ve removed UBS Asset Management. Brandywine Global Investment Management and PGIM Fixed Income have been appointed as global bond managers in the all maturities strategy, and we’ve removed Amundi Asset Management, Insight Investment Management, Loomis Sayles and Wellington Management.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/MLC-WHOLESALE.jpgMarch, 2022
The fund returned a negative 4.8% for the quarter and a negative 3.8% in the year to 31 March 2022 (before fees and tax). The fund outperformed the benchmark return for the quarter by 0.6% and by 1% over the year.
Global government bond yields have risen sharply over the past three months. Inflation concerns given higher commodity prices and persistent supply disruptions have been the key driver for rising bond yields. The Russian – Ukraine conflict since 24 February 2022 has only intensified these global inflation concerns.
Corporate bonds have also proven sensitive to expectations for higher interest rates in coming years with the potential to slow global growth and impact profit margins.
Please refer to the ‘Market commentary’ for an overview of what happened in other domestic and global markets over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/MLCMasterKeyInvestmentServiceFundamentals-MLCWholesaleDiversifiedDebtFund-FSP.pdfSeptember, 2021
The fund returned 0.3% for the quarter and 0.3% in the year to 30 September 2021 (before fees and tax). The fund outperformed the benchmark by 0.1% for the quarter and by 1.4% over the year. Global government bonds delivered mild returns for the September quarter. Government yields have drifted sideways given the counterbalancing forces of low interest rate settings by central banks against the climate of rising inflation. Corporate bonds have delivered solid positive returns over the past quarter. Strong optimism for better global health outcomes with the vaccine rollouts and economic recovery has seen investors embrace credit risk.
File:December, 2020
The fund returned 1.6% for the quarter and 3.8% in the year to 30 September 2020 (before fees and tax). The fund outperformed the benchmark by 0.7% for the quarter and by 0.5% over the year. Global government and corporate bonds have delivered solid returns over the past quarter. Assertive central bank bond buying and hopes for a virus vaccine has seen investors become more comfortable with credit risk.
The revival in global share markets has also contributed to improving risk appetites. With the extraordinarily low levels of government bond yields across the developed world (most notably Germany and Japan which are below 0% for long maturities), we have tilted the fund modestly towards credit assets where yields are higher and the interest rate risk (duration) is lower. Please refer to the Market commentary for an overview of what happened in other domestic and global markets over the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/MLCMasterKeySuperFundamentals-MLCDiversifiedDebtFund-FSP.pdfticker: MLC0839AU
release_schedule: Quarterly
commentary_block: Array
factsheet_url:
https://www.mlc.com.au/fundprofile/flow/fundProfile?execution=e3s3
Performance -> Commentaries -> Choose “Fund Commentary”
manager_contact_details: Array
asset_class: Fixed Income
asset_category: Bonds - Global / Australia
peer_benchmark: Fixed Income - Bonds - Global / Australia Index
broad_market_index: Global Aggregate Hdg Index
structure: Managed Fund
fund_features:
MLC Wholesale Diversified Debt A seeks to be a complete portfolio for the debt securities asset class, and aims to deliver growth by using investment managers who invest and diversify across many companies and securities within that asset class.
- The fund is diversified across different types of debt securities in Australia and around the world that typically have a reasonably long time to maturity.
- Other assets such as commodities and hybrid securities may be used to hedge against inflation or provide additional diversification.
- Foreign currency exposures, will generally be substantially hedged to the Australian dollar.
- Manager Address : 14 Hamilton St, Mont Albert VIC 3127, Australia
- Phone : +61 3 8634 4721
- Website : https://www.mlc.com.au/
- Contact Page : https://www.mlc.com.au/personal/contact-us-investor