It has been a volatile ride for bond investors during the past few years due to central banks rapidly raising interest rates and continued macroeconomic uncertainty causing chaos at the long end of the curve.
As a potential peak in rates approach, bonds have been in the spotlight as the asset class is expected to perform well when interest rates fall.
This would be the opposite of 2022 when rates ratcheted up, causing both bonds and equities to incur heavy losses.
However, some bond funds managed to perform better than others during the turmoil of 2022, although fewer have continued to deliver high returns relative to their peer group in the following year.
Below are six corporate bond funds with top-ranked performance both year-to-date and in 2022, based on data from FE fundinfo*.
Xtrackers USD Corporate Bond UCITS ETF
This exchange traded fund (ETF) tracks the performance of the Bloomberg USD Liquid Investment Grade Corporate Index, which comprises USD-denominated investment grade bonds.
It has the highest performance year-to-date of 23.36% versus the sector average of 5.55%. In 2022 it was down 8.51% versus an average loss of 14.56% from the wider sector.
Wellington Global Credit Buy and Maintain
This actively managed bond fund, run by Mahmoud El-Shaer, invests primarily in investment grade bonds with a focus on credit quality, security selection and capital preservation.
The strategy is up 13.96% year-to-date, the second highest year-to-date performance in the list. However, it was down 10.94% in 2022 – but four percentage points better than the average sector loss of 14.56%.
iShares $ Corp Bond Interest Rate Hedged UCITS ETF
This ETF tracks the iBoxx USD Liquid Investment Grade IR Hedged Index, which buys investment grade bonds while implementing a duration hedge using short positions in US Treasury futures.
This fund is up 10.81% year-to-date, and was down only 0.04% in 2022. Its interest rate hedges have proven to be a timely feature of the past two years.
Barings Global Loan
This actively managed credit fund is run by Chris Sawyer, Casey McKinney, Oliver Harker-Smith and Brian Pacheco. The strategy invests primarily in senior secured loans, as well as senior secured bonds issued by North American and European companies.
This fund is up 10.57% year-to-date, after being down 4.72% in 2022, still ahead of the wider sector by almost 10 percentage points.
Nikko AM SGD Investment Grade Corporate Bond ETF
This ETF tracks the iBoxx SGD NonSovereigns Large Cap Investment Grade Index, which is made up of investment grade bonds issued by Singaporean companies.
This fund is up 7.42% year-to-date. In 2022 it was down 8.44% which was still ahead of the sector average loss.
First Sentier Global Credit Income
This actively managed global credit fund has a focus on exploiting relative value opportunities in global credit with a focus on capital preservation.
This fund is up 6.94% year-to-date, after a 0.57% loss in 2022 in US dollar terms, the lowest loss from an actively managed in this list.
*The top-performing funds were measured in US dollar terms. The year-to-date performance is based on data from FE fundinfo ending 1/12/2023. The data only includes funds that fall under the Singapore Mutual Fixed Int – Global Corporate sector in the FE analytics platform. The performance ranking was based on which funds were ranked top quartile in the sector.
