WHAT WE'RE UP TO
A look at one of the few mutual fund sectors to deliver good results lately, global bond funds.
All global bond funds were rounded up and then ranked according to their year-to-date returns. Three-year returns were included as well to provide a longer-term perspective.
SO WHAT DID WE TURN UP?
An impressive showing from a type of fund that's largely invisible to most investors. Money has been made by the vast majority of funds in the sector, and some have delivered returns that investors haven't seen in many a year from bond funds of any type.
You'd expect bond funds to hold up well at a time when the stock markets are caught in a brutal downdraft, but Canadian bond funds have been only so-so in 2008. Global bond funds have outperformed for a couple of reasons, one of them being that they can hold bonds issued in countries where interest rates are higher. Another reason is this year's decline in the Canadian dollar.
Prior to 2008, the dollar had ridden a multiyear rally that offset gains produced by stocks and bonds denominated in the foreign currencies. Global bond funds were caught up in this, big time. Just check out how feeble the three-year returns are for many of the funds on our list. Go back further in time and the results are equally lame - the average global bond fund made just 1.1 per cent annually for the 10 years to Sept. 30.
Now, with the loonie losing some altitude, funds that invest in foreign stocks and bonds have been getting a lift. You won't notice this in U.S. and global equity funds because down markets overshadow everything. But in global bond funds, the loonie's weakness is a huge help.
How much of your portfolio should be in global bonds? An informal survey of half a dozen or so wrap accounts, basically funds that provide a balanced portfolio in a single product, found global bond weightings ranging from 3 to 22 per cent. The latter extreme includes both global government and corporate bonds.
Top global bond funds based on YTD return
|Fund name||Last reported MER date||MER||As of Sept. 30, 2008: Net Assets ('000)||As of Sept. 30, 2008: YTD % return||As of Sept. 30, 2008: 3-year % return||Minimum investment|
|SEI Enhanced Global Bond-O||9/30/2008||0.19||84,553||12.06%||3.48%||150,000|
|CIBC Global Bond Index||8/29/2008||1.03||60,319||9.63%||1.76%||500|
|Altamira Global Bond||9/30/2008||2.38||5,914||8.30%||0.36%||1,000|
|Standard Life Int'l Bond-A||9/30/2008||2.12||22,216||8.28%||1.80%||1,000|
|Scotia Global Bond||7/31/2008||2.02||19,523||8.10%||-0.39%||500|
|Tmpltn Global Bond||9/30/2008||2.07||48,444||7.95%||4.61%||500|
|United Global Fixed Income Pl-W||9/30/2008||0.20||114,450||7.67%||1.74%||100,000|
|National Bank Global Bond||9/30/2008||2.00||287,369||7.59%||0.46%||500|
|AGF Global Government Bond||9/30/2008||1.90||158,964||7.24%||0.69%||500|
|Manulife Strategic Income Fund||12/31/2007||2.12||127,384||7.09%||500|
|CI Global Bond||9/30/2008||2.02||337,128||6.32%||0.72%||500|
|TD Global Bond-I||9/30/2008||2.15||166,487||6.05%||-0.24%||100|
|United Global Fixed Income CC-A||9/30/2008||2.34||33,571||5.76%||25,000|
|AIC Global Bond||5/30/2008||1.91||29,184||4.93%||1.08%||250|
|Fidelity Global Bond-A||9/28/2007||1.94||2,640||4.04%||500|
|AIC PPC Global Fixed Income Pool||5/30/2008||2.13||10,594||3.13%||250|
|GGOF Global Bond Fund Classic||5/30/2008||1.48||3,693||2.83%||0.40%||500|
|CIBC Global Bond||8/29/2008||1.94||64,526||2.24%||-1.66%||500|
|QFM Fixed Income||1.81%||-0.11%||2,500|
|Renaissance Global Bond||4/30/2008||1.95||11,067||1.51%||-1.69%||500|
|DFA 5-Year Global Fixed Class A||1.45%||1.76%||10,000|
|Mackenzie Sentinel Global Bond||12/31/2007||2.07||56,403||1.30%||0.18%||500|
|RBC Global Bond||6/30/2008||1.68||904,737||0.47%||1.66%||500|
|BMO World Bond||9/28/2007||2.26||352,058||0.40%||1.00%||500|
|Dynamic Advantage Bond||6/29/2007||1.67||88,787||0.05%||500|
|Fonds Zéro coupon-profil Québec||9/30/2008||1.84||12,089||-1.09%||1.55%||5,000|
|Fidelity Global Bond Currency Ntr-A||9/28/2007||1.94||1,427||-1.33%||500|
|Frk Tmp Glob Agg Bond-A||9/30/2008||1.58||5,709||-1.52%||500|
|Manulife Canadian Bond Plus Fund||12/31/2007||1.95||90,217||-2.41%||500|
|FrontierAlt Opportunistic Bond A||8,597||-3.30%||500|
© 2007 The Globe and Mail. All rights reserved.
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