In November, the Pacific Coolabah Global Active ‘PCGA’ GBP share class outperformed the Bloomberg Global Aggregate Corporate Index benchmark by 0.15%, delivering a return of +1.51% compared to the index’s 1.36%. The USD share class similarly outperformed by a margin of +0.19%, with returns of +1.54% versus 1.35% for the index.
November saw a rally in global bond yields, exemplified by the 7-year US Treasury (which has a duration similar to the index) dropping by 12 basis points (bps). This rally partially reversed the significant yield increases seen in October. Nonetheless, risk-free yields generally stayed near the upper end of their multi-year ranges. Both 10-year UK Gilt and German Bund yields decreased by 20 and 30bps, respectively. Meanwhile, the French 10-year yields declined less than their German counterparts, resulting in an 86bps widening in the spread over German Bunds—a level last observed during the Eurozone crisis in 2012.
The fund’s absolute performance was largely driven by the rally in global sovereign yields and was also supported by a generally positive risk sentiment in the US following the election results. Benchmark US credit spreads for corporate bonds, as measured by the Bloomberg USD Corp Agg Index, tightened by 6bps over the month to 77bps. In contrast, the European benchmark underperformed, widening by 3bps to 107bps, primarily due to the widening spreads of French government bonds.
Since its inception on October 10, PCGA’s GBP share class has outperformed the benchmark by +2.38% net (+2.95% gross), with an absolute return of 14.85% net of fees (15.42% gross) compared to the index return of 12.47%.
PCGA’s annual volatility is comparable to the index (5.1% vs. 5.0%), and its Sharpe Ratio since inception of 1.7 times has been superior to the index’s 1.2 times.
Currently, PCGA’s weighted average yield to expected maturity is 5.39%, compared to the index’s 4.54%. PCGA’s weighted-average credit rating of A- is higher than the index’s BBB+ rating. The weighted average rating for PCGA’s active (as opposed to passive) exposures is also A-.
PCGA participated in 16 primary deals globally, including issuers such as ABN Amro, Australia & New Zealand Banking Group, Barclays, Belfius, Citibank, Commerzbank, Commonwealth Bank of Australia, ING, Lloyds, National Australia Bank, QBE Insurance Group, Societe Generale, Swedbank, Westpac, Woolworths Group, and the sub-sovereign issuer State of Queensland.
