September, 2023
The Fund was down 3.01% during the month of September. In comparison the benchmark was down 1.84% over the month of September. Within the Fund, an overweight to overall Fund duration detracted from returns as yields rose. While an underweight to Japanese duration was additive. An overweight to the 5-year part of the US yield curve and an underweight to 10-years added to returns as the yield curve steepened. An overweight to US agency mortgage backed securities detracted modestly from returns as spreads widened. While US high-yield corporate bonds underperformed. Emerging market country exposure had a negative impact on returns as currency positioning detracted from returns as the US dollar strengthened.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-wa-global-bond-au-7.pdfJune, 2023
The Fund was down 0.30% during the month of June. In comparison the benchmark was down 0.16 over the month of June. Within the Fund, duration positioning had a negative impact on performance as yields in the US and the UK moved higher. While, short-dated US and UK government bond yields moved sharply higher, also detracting from returns. On the other side, positives within the Fund included, the spread between long-term inflation expectations in the US versus Germany declining modestly, adding to returns. While Emerging Market country and foreign exchange exposure were positive contributors. High yield corporate bonds also had a positive impact on returns. In addition, an overweight to corporate bonds added to returns as spreads narrowed. While an overweight to US agency MBS also added value.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-wa-global-bond-au-6.pdfMay, 2023
The Fund was up 3.06% during the month of March, and was up 2.96% over the March quarter. In comparison the benchmark was up 2.11% over the month of March and was up 2.38% over the March quarter.
Within the Fund, Investment-grade and high-yield corporate credit spreads were wider over the month. USD-denominated emerging market (EM) bond spreads widened, while EM local yields fell but underperformed US Treasury yields. The US dollar was generally weaker across both developed market (DM) and EM currencies.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-wa-global-bond-au-5.pdfMarch, 2023
The Fund was up 3.06% during the month of March, and was up 2.96% over the March quarter. In comparison the benchmark was up 2.11% over the month of March and was up 2.38% over the March quarter.
Within the Fund, Investment-grade and high-yield corporate credit spreads were wider over the month. USD-denominated emerging market (EM) bond spreads widened, while EM local yields fell but underperformed US Treasury yields. The US dollar was generally weaker across both developed market (DM) and EM currencies.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-wa-global-bond-au-4.pdfDecember, 2022
The Fund was down 1.36% during the month of December, and was up 1.86% over the December quarter. In comparison the benchmark fell 1.31% over the month of December and was up 0.64% over the December quarter. Within the Fund, overweight positions in US, UK and core European duration detracted as yields rose. An underweight to Japanese duration contributed to returns. US yield-curve positioning added modestly to returns in December, and currency positioning was also a positive as the US dollar weakened. An overweight to US high-yield corporate bonds detracted to the Fund’s return. From a positioning perspective, we reduced the overweight allocation to UK duration early in the month. We added to core European duration as yields rose in the aftermath of the ECB policy meeting, and we tactically traded the South African rand.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-wa-global-bond-au-3.pdfSeptember, 2022
The Fund was down 4.49% during September, and was down 4.93% over the September quarter. In comparison the benchmark fell 3.50% over the month of September and fell 3.78% over the September quarter. Within the Fund, overweight positions in US, UK and Australian duration detracted from returns. While a flatter US yield curve was also additive in September. Overweight's to emerging market government bonds and corporate bonds detracted from performance. While currency positioning detracted as the US dollar strengthened. Long positions in the Japanese yen, Norwegian krone and in select emerging market currencies detracted. This was partially offset by short British pound and Chinese renminbi exposures, which added to returns. From a positioning perspective, we increased the underweight to Japanese duration and reduced the US yield-curve flattener. We purchased long UK inflationlinked government bonds. While also reducing our underweight to the British pound, initiated a long Canadian dollar exposure and added to the Japanese yen.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-wa-global-bond-au-2.pdfJune, 2022
The Fund was down 2.62% during June, and was down 5.37% over the June quarter. In comparison the benchmark fell 1.64% over the month of June and 4.66% over the June quarter.
From a performance standpoint, a modest overweight to overall portfolio duration detracted from performance. While, short positions in US and UK inflation swaps were positive contributors to performance. An overweight to Emerging market bonds and currencies detracted, while overweights to European financial issuers detracted over the month of June.
In addition the Funds allocations to high-yield corporate bonds negatively impacted performance. While a short position in the Japanese yen provided useful diversification and added to returns over the month of June. Form a positioning perspective within the Fund, we added to core European duration as yields rose and increased US yield-curve flattener, rotating 5-year duration exposure into 30-year bonds. We increased an underweight to Japanese duration and initiated an overweight to local currency Polish government bonds. The Fund also added to investment-grade corporate bonds with a focus on high-quality banks and moved from a short to long position in Japanese yen
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-wa-global-bond-au-1.pdfMarch, 2022
The Fund was down 2.96% during March, and was down 6.45% over the March quarter. The Fund’s underweight to core European duration was positive but this was offset by overweight positions in US, Australian and Canadian duration. While an overweight to spread sectors contributed to performance. On the other side, an overweight to local EM government bonds detracted from performance while currency positioning was modestly negative. The Fund switched from underweight to overweight overall Fund duration, while adding to core European and UK duration as yields rose. We reduced the Fund’s US yield curve-fattening position and we rotated from hard currency EM bonds into investment-grade corporates. ƒThe Fund also reduced EM currency exposure versus the US dollar and closed underweights to the Australian and Canadian dollars.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-wa-global-bond-au.pdfSeptember, 2021
The Fund was down –0.95% during September, and remained flat through the third calendar quarter of 2021. Over the quarter, tactical duration management added value as yields declined intra-quarter and rose again towards quarter-end added value. A flatter US yield curve was a strong contributor to performance through the quarter. Country exposure was positive overall. Emerging Market country exposure benefited from higher income carry and as longer-dated yields declined in Indonesia and China, partly offset by exposure to Mexico and South Africa where yields rose. Reducing duration in Australia added value as yields rose towards quarter end.
Western Asset expects global growth to decelerate as we move into 2022. Contributing factors include a sharp reduction in global fiscal stimulus, a reduction in monetary accommodation by key central banks such as the Fed, ECB and BoE, and the persistence of secular-related headwinds that include rising global debt burdens, aging demographics and technology displacement. Inflation remains challenging for policymakers, but we expect the impact of supply-chain disruptions to ease meaningfully through the course of next year. While Covid continues to bedevil global populations, we are optimistic that the worst is behind us, which bodes well for the continued recovery of reopening sectors and spread product performance. Portfolios maintain modest exposures in peripheral and semi-core European bonds, which we believe will continue to benefit from the ECB and EU support programs, and from the ongoing economic recovery in the region. Portfolios also maintain modest exposures to longer-dated US Treasuries (USTs) for diversification, and to select high-quality EM exposures. Following the significant market re-pricing of inflation in recent months, global portfolios have initiated short positions in breakeven inflation spreads in select economies to benefit from a decline in inflation expectations. The Firm’s bias is to remain modestly overweight corporate bonds, with a bias to banks, select reopening industries where valuations have yet to fully recover and rising-star candidates, where allowed.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-lm-wa-global-bond-1-1.pdfAugust, 2021
The Fund was up 0.17% during August, while the benchmark fell 0.22%. The combination of duration and yield curve positioning was the most significant positive contributor, mainly due to overall long U.S. and short German duration exposures. High-yield and investment-grade credit, mainly energy, but also credit default swap index (CDX) and financial exposures, were positive for returns. Peripheral Europe was a small contributor as a result of short 10- year Italian Treasury exposure. Emerging market (EM) debt was also a small positive for returns, mainly due to rate exposures in Indonesia and Mexico which offset the negative effect of exposure to Brazilian rates. Overall foreign exchange (FX) positioning was a small net positive for performance. EM FX contributed, mainly due to long Brazilian real exposures, and DM FX detracted, mainly as a result of long Canadian dollar and Japanese yen exposures.
Headline duration increased by almost two years, taking the Fund’s effective duration close to five years. Most of the increase came in the 5- and 10-year keyrates. Long-end duration was modestly trimmed against the increase. Swap spreads and Treasury inflation-protected securities (TIPS) positioning were unchanged during the month. The U.S.-Germany 10-year spread trade was reduced during the month by about a half-year after the spread broke through 170basis points. In credit, investment-grade positions were trimmed by less than 1%, mostly in industrials and financials. Below-investment-grade credit was reduced by a little more than 1%, mostly in financials and CDX. In EM, the long Brazilian real exposure increased by a percent, as the Brazilian central bank continued to hike rates and it’s midway through its hiking cycle, while the long Russian ruble position was reduced by a percent, as Western Asset believes Russia is near the end of its rate-hiking cycle.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-lm-wa-global-bond-4.pdfJuly, 2021
The Fund was up 0.78% in July, while the Benchmark which gained 1.25%. An underweight to core European duration detracted as global yields fell sharply. This was partially offset by an overweight to US duration. Overweight to Australian, Chinese and Indonesian government bonds added value while an overweight to spread sectors detracted. Emerging market currency exposure also detracted as the US dollar strengthened. During July, overall portfolio durationwas reduced, switching from overweight to underweight. The Fund also initiated an underweight to UK duration, and an overweight to local Russian government bonds while reducing the overweight to the Chinese renminbi.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-lm-wa-global-bond-3.pdfJune, 2021
The Fund was up 0.49%, in line with the Benchmark. An overweight to the long-end of the US yield curve added strongly to returns as the yield curve flattened. An overweight to longer-dated Australian government bonds added value. An overweight to spread sectors and in particular high-yield corporates, where permitted, contributed. EM currency exposure detracted as the US dollar strengthened. In terms of activity within the Fund, the US yield-curve flattening position was reduced, and an overweight to UK was closed out, and initiated overweight to Canadian duration. The Fund also increased overweight to emerging market currencies versus the US dollar
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-lm-wa-global-bond-2.pdfApril, 2021
The Fund was gained 0.73% in April, ahead of the Benchmark which gained 0.24%. Duration positioning added to returns benefitting from an overweight to US duration and an underweight to core European duration. A bias towards the long end of the US yield curve also contributed as the curve flattened. Overweight Australian and Indonesian government bonds added value and the Fund’s overweight to corporate bonds contributed. EM currency exposure contributed as the US dollar weakened. Within the Fund, an underweight to French government bonds was initiated and an overweight to South African rand was closed out and added to the Hungarian forint and the euro.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-lm-wa-global-bond-1.pdfDecember, 2020
The Fund was up 0.9% in December, while the Benchmark rose 0.3%. The Fund was up 3.0% for the December quarter and the Benchmark rose 0.8%. An overweight to Italian and select EM government bonds added to returns. An overweight to spread sectors contributed strongly.
Opportunistic allocations to inflation-linked bonds were positive as inflation expectations rose globally. An underweight to the US dollar contributed as the US dollar weakened. The Fund reduced its allocation to US TIPS and also initiated an overweight to the Australian dollar and British pound. The Fund also reduced overweight to the Norwegian krone and Japanese yen, while increasing overweight to the Russian ruble. The Fund reduced overweight to investment-grade financials.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/fund-commentary-lm-wa-global-bond.pdfticker: SSB8320AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
Document -> Product Literature -> Fund Commentary
manager_contact_details: Array
asset_class: Fixed Income
asset_category: Bonds - Global
peer_benchmark: Fixed Income - Bonds - Global Index
broad_market_index: Global Aggregate Hdg Index
structure: Managed Fund
fund_features:
Western Asset Global Bond A aims to outperform the Bloomberg Barclays Global Aggregate Index (hedged into Australian dollars) (Benchmark) over rolling three-five year periods. The investment process applies an active, team-managed strategy that employs a long term, value-oriented approach to identify inefficiencies and subsequent mispricing opportunities in the global fixed income market.
- The Fund seeks to add value through duration management, yield curve selection, sector allocation, issue selection, country and currency allocation.
- Portfolio risk is controlled through market and sector diversification, position limits, duration guidelines and active hedging of currency exposures.
- Opportunistic allocations to high yield credit and emerging market debt securities.
- Risk controlled through broad diversification across markets and sectors, duration management and active hedging of currency exposure
- Manager Address : Medium Grey background #626262 Sydney Level 25, 88 Phillip Street, Sydney NSW 2000
- Phone : +61 3 9017 8600
- Website : https://www.leggmason.com/en-au.html
- Contact Email : auclientadmin@leggmason.com