Global Bond Fund by monkey6


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									Monthly Report

May 2009

Global Bond Fund
Performance Review
One Month % Global Bond Fund (USD) Gross of fees Barclays Capital Global Aggregate Index (USD)3 Global Bond Fund (RAND) Gross of fees Barclays Capital Global Aggregate Index (RAND)3
1 2 3

Three Months % 10.4 6.9 -11.7 -14.5

Year to Date % 4.8 1.1 -8.9 -12.1

One Year %1 -0.6 2.4 4.6 7.8

Three Years 4.5 6.3 11.0 12.9

Five Years % 4.8 5.5 9.3 10.0

Ten Years % 5.3 5.7 8.0 8.5

Since Inception %2 5.9 6.0 10.5 10.7

5.3 3.6 -0.2 -1.8

Returns greater than one year are annualised. Inception date 30/09/94. Performance is measured from 01/10/94. In order to enable accurate peer relative and total return benchmark relative performance comparisons, performance is calculated from the first full month following inception. Global Bond Fund Benchmark prior to October 2001 was Citigroup WGBI.

Fund Highlights and Portfolio Management Activity
6.0 5.2 5.0

Monthly Returns (%)




3.0 2.0 2.0


0.0 Barclays Capital Global Barclays Capital Global Barclays Capital Global Barclays Capital Global Aggregate Unhedged Aggregate Unhedged ex Aggregate Unhedged ex Aggregate Unhedged ex Europe ($) US ($) Japan ($) Index ($)

Colchester Global Investors 15.0% PIMCO 35.0% Drake 15.0%

The Barclays Capital Global Aggregate Index gained 3.6 % in US dollar unhedged terms, and 0.2% in dollar hedged terms. The dollar weakened over the month, as investors favoured riskier assets and commodity-linked currencies - which reflected a steady rise in commodity prices, notably crude oil. Credit spreads tightened, amid optimism that the worst of the global recession had passed, while high yield issuance reached its highest level since October 2007. The trend for yields on corporate debt has been downwards, while for government debt it has been upwards - which is typically consistent with diminishing risk and the pricing in of some form of recovery. The upswing in sentiment was boosted by confirmation that Japan's industrial output had surged the most in 56 years - helping it post an unexpected trade surplus - while there was evidence of a revival in India's domestic economy. UK consumer confidence increased to its highest in eleven months, while the US housing market experienced the biggest increase in pending home sales since 2001. Emerging market bonds led the month's gains after extending their biggest three-month rally for seven years, as higher commodity prices and international bailout packages prompted speculation that the likes of Argentina and the Ukraine would be able to pay back their debts. Investors snapped up debt from raw-material exporting nations such as Brazil, Russia and Indonesia. However, risks to the downside remain - corporate default rates are rising, with the number of defaults this year four times higher than at the equivalent stage in 2008. Meanwhile, eurozone inflation reached zero for the first time since 1991, forcing the European Central Bank to cut interest rates by 0.25% to 1%, their lowest-ever level. In contrast, US Treasuries endured their second consecutive monthly loss, as persistent worries about ballooning levels of issuance drove benchmark yields to six-month highs in the US, Europe and Japan. In the former, 10-year yields climbed the most in almost six years, as President Obama's record borrowing spree overwhelmed Federal Reserve efforts to cap interest rates. Inflation concerns further fuelled the sell-off as oil prices surged to over $66 a barrel, heightening expectations of increased buying of commodities. The Fund outperformed, driven by its credit exposures after spreads narrowed - both in the high yield and investment-grade sectors of the market (notably in financials and banks) - reflecting diminishing risk and increased expectations for a recovery. The majority of the underlying managers delivered returns in excess of the benchmark. Loomis outperformed significantly after making strong gains in both of the aforementioned sectors, while an allocation to emerging market debt added further to performance. Colchester was the only manager to underperform, after its structural underweight to credit weighed on returns.


Loomis 35.0%
As at 31/05/2009


Monthly Report

May 2009

Monthly Manager Performance
Manager Colchester Global Investors Approach / Process Macro Value *Manager Performance -Russell Analysis Colchester was the worst-performing manager in the Fund and lagged the benchmark. On the interest rate side the overweight duration positions in New Zealand and Australia detracted, while the underweight to US duration could only partly offset these losses. Currencies also detracted, and the manager’s structural underweight to credit was not helpful in a month where credit did well. Drake was the best-performing manager, having solidly outperformed the Index in May. Returns were driven by its credit positioning, notably its overweights to asset-backed securities and high yield debt. The underweight to investmentgrade credit, particularly financials, was a small detractor over the month. Loomis outperformed the benchmark over the month after making strong gains in credit, particularly from its high yield debt and investment-grade corporate exposures. The manager’s allocation to emerging market debt added further to performance. An overweight to US duration and overweight to the US dollar versus the euro and the Japanese yen detracted over the month. PIMCO finished ahead of benchmark after strong gains in financials, the manager’s key sector overweight at the moment. Overweights to high yield debt and asset-backed securities were also additive, but overweight duration in the US was a negative.


Global Core Plus



Security Selection



Sector Specialist


*Manager Attribution Key
++ + Flat --

Relative Performance vs Fund Benchmark >0.25 +0.05% to +0.25% -0.05% to +0.05 -0.25% to -0.05% <-0.25%

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