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Pimco leads pack of global bond funds

jnelson@globeandmail.com

What are we looking for?

Regardless of recent volatility, we're still in a low interest rate environment. Some pros suggest looking to overseas markets to generate returns from fixed-income investments. Let's see which global bond funds generated the best returns in the past year.

The screen

We looked for the 15 best performers among global fixed income funds for the year ended May 31. U.S. dollar, segregated and duplicate versions of funds were excluded.

What did we find?

The bond kings at Pimco reign supreme with a return of 21 per cent on their Monthly Income fund for the period.

Home to founder Bill Gross, manager of the world's biggest bond fund, Pacific Investment Management Co. LLC is well known for its ability to manage debt, even if its Canadian investment offering is only 21/2 years old.

Pimco believes that it can react quickly to the world's changing economic conditions because it is not bound to any particular sector. The fund's mandate is to manage a broad range of fixed-income instruments of varying maturities from around the world, while keeping a relatively low risk profile.

"Pimco is focusing less on interest rate strategies and more on what we believe are high quality assets in an effort to generate income in the portfolio," the fund's notably risk-averse managers wrote in a monthly fund update in May.

About 40 per cent of the portfolio is weighted toward government-related securities. Another 34 per cent is in mortgages.

The fund actually has a relatively small portion of its portfolio in emerging markets, with a 7-per-cent weighting as of May's end, up from 6 per cent in April. "We are taking modest exposure to high quality developed and emerging market credits such as Brazil and Mexico, which have relatively little debt coming due in the near future and a high level of reserves," the report sdaid.

Invesco's Emerging Markets Debt fund ranks second in the chart, with a return of 9.8 per cent in the period.

*****

GLOBAL FIXED INCOME FUNDS 1 YEAR TO MAY 31, 2013

% return (May 31)% returnAssets
FundTicker1-yr3-yr5-yr10-yr20122011201020092008MER($-mil)
PIMCO Monthly Income21.0%24.0%1.404,028.9
Invesco Emerging Markets Debt9.8%12.4%1.9953.2
Templeton Global Bond8.8%5.5%8.0%4.4%7.7%0.6%8.3%4.0%24.1%2.16501.0
PowerShares Senior Loan CAD Hedged ETFBKL-T8.6%0.9027.7
Manulife Asia Total Return Bond Fund8.2%9.7%2.3019.8
iShares JPM USD Emerging Mkt Bond CAD Hdgd ETFXEB-T6.4%13.2%0.7348.8
Dynamic Strategic Global Bond Fund5.8%5.7%2.0775.1
CIBC Global Bond5.8%7.4%6.8%1.7%7.4%9.0%6.2%1.8%12.1%2.07143.6
Renaissance Global Bond5.7%6.9%5.7%1.2%7.0%8.7%4.6%0.5%9.9%2.01197.4
Mackenzie Sentinel Global Bond5.0%2.3%3.6%1.2%4.1%1.5%-0.1%6.3%5.0%2.19110.4
Dynamic Corporate Bond Strategies4.7%6.4%1.98334.5
iShares U.S. Corporate CAD Hedged ETFXIG-T4.7%8.0%8.8%10.4%0.3188.8
RBC Global Bond2.6%3.7%4.3%3.3%5.6%4.5%3.0%3.4%5.1%1.762,671.3
AGF Global Government Bond2.5%4.8%4.9%2.0%5.6%5.1%0.1%-7.0%26.9%1.92110.4
PIMCO Global Advantage Strategy Bond2.5%4.8%1.79375.5
S&P/TSX Total Return13.3%5.4%-0.1%9.0%7.2%-8.7%17.6%35.1%-33.0%
MSCI World ($ Cdn)28.4%13.5%2.9%5.3%14.0%-2.9%6.8%11.8%-26.1%
Source: Lipper

© 2007 The Globe and Mail. All rights reserved.

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