While equity funds dominate FSA‘s top and bottom performers listing, fixed income funds, due to their more conservative risk-return profile, have little chance of matching the performance of the top equity funds.
FSA has decided to zero in on the fixed income fund category separately and highlight the best and the worst performers among funds registered for sale in Hong Kong or Singapore.
Top three-year performers
| Fund | Three-year gross return in US dollars | Yield |
| Natixis H2O Multibonds | 66.42% | N/A |
| Value Partners Greater China High Yield Income | 30.92% | 8.2% |
| BEA Union Investment Asian Bond and Currency | 26.98% | 5.5% |
Data: FE, cumulative performance in US dollars, on 31 October 2017. Yields are only for income-paying funds.
The French-domiciled Natixis H2O Multibonds Fund, which is available in Singapore, far outpaced all other fixed income products delivering a 66.4% return over the past three years and a 36.74% return over the past 12 months.
The fund’s top geographic exposure at the end of June 2017 was: Greece (32.50% of net assets), Italy (19.05%) and Portugal (17.09%), according to the fund’s semi-annual report. The fund has some very high risk holdings. However, so far the bet on the wobbly economies of Southern Europe has paid off, as their bond yields declined over the past three years, partly due to the quantitative easing by the European Central Bank. The fund uses leverage and derivatives to enhance returns.
The two local fund managers, Value Partners and BEA Union Investment delivered stellar returns on their Greater China high yield and Asian bond funds.
Top one-year performers
| Fund | Three-year gross return in US dollars | Yield |
| Natixis H2O Multibonds | 36.74% | N/A |
| Bluebay Financial Capital Bond | 27.84% | N/A |
| GAM Star Credit Opportunities | 21.88% | 2.61% |
Data: FE, performance in US dollars, on 31 October 2017. Yields are only for income-paying funds.
The Bluebay Financial Capital Bond, managed by Canada’s RBC Global Asset Management, invests in subordinated debt of financial institutions, which includes contingent convertibles and US perpetual preferred shares. The fund’s semi-annual report credits its solid performance to its UK exposure, in particular to Barclays and RBS, as well as France’s Societe Generale and Spanish banks.
The GAM Star Credit Opportunities also invests in subordinated debt of European financial institutions, in particular perpetual, floating rate and fixed-to-floater debts instruments, in search of higher returns.
The bottom
While BNY Mellon’s Federico García Zamora and BNP Paribas’ Guillermo Felices are bullish on emerging market local currency, and in particular Latin American bonds, this focus didn’t work well for the Bluebay Emerging Market Local Currency Bond Fund, which returned a 23.42% loss over the past three years.
Bottom three-year performers
| Fund | Three-year gross return in US dollars | Yield |
| Bluebay Emerging Market Local Currency Bond | -23.42% | N/A |
| Nikko AM World Bank Green | -20.38% | N/A |
| Robeco Emerging Debt | -19.12% | N/A |
Data: FE, cumulative performance in US dollars, on 31 October 2017. Yields are only for income-paying funds.
The Nikko AM World Bank Green Bond fund invests mainly in bonds issued by the International Bank for Reconstruction and Development, the financial arm of The World Bank, in support of the bank’s projects that meet criteria for low carbon development.
The Robeco Emerging Debt fund also has an ESG focus, with the ESG factors playing a role in country and credit analysis.
Bottom one-year performers
| Fund | Three-year gross return in US dollars | Yield |
| Parvest Bond JPY | -9.63% | N/A |
| Bluebay Investment Grade Global Aggregate Bond | -4.64% | N/A |
| Bosera Global Income Opportunities | -3.84% | N/A |
Data: FE, performance in US dollars, on 31 October 2017. Yields are only for income-paying funds.
The Parvest Bond JPY Fund, investing in Japan government bonds, suffered from the devaluation of the yen in the past 12 months, while delivering only a 1.2% loss in its native currency.
Both the Bluebay Investment Grade Global Aggregate Bond and Bosera Global Income Opportunities, have an international focus. The Canadian fund manager of Bluebay focuses on investment grade corporate issues while the Chinese manager of the Bosera fund has 92% of assets in non-rated debt, according to FE.
