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Navigating the Fixed Income Landscape: A Quarterly Performance Deep Dive

Third Quarter 2025 Fund Performance Analysis

In the third quarter of 2025, the Institutional Class shares of the Macquarie Corporate Bond Fund demonstrated a marginal underperformance when measured against its primary benchmark, the Bloomberg US Corporate Bond Index. This slight deviation in returns warrants a closer examination of the underlying market dynamics and portfolio positioning.

Impact of Strategic Security Selection

Despite the overall underperformance, the fund's strategic selection of individual securities yielded favorable outcomes. A significant driver of this positive contribution was the overweight allocation to long-end spread duration within the electric utility sector. This positioning proved beneficial as credit spreads tightened, and longer-dated issues within this segment delivered superior returns, highlighting the efficacy of the fund's security-specific choices.

Challenges from Shorter-Duration Hybrid Securities

Conversely, the fund's exposure to certain hybrid issues with shorter durations (to call date) presented a drag on performance. These shorter-dated bonds experienced a period of lagging returns throughout the quarter, counteracting some of the gains achieved through other portfolio segments. This illustrates the sensitivity of bond performance to varying maturities in a dynamic market environment.

Overview of Market Conditions

During the third quarter of 2025, the Bloomberg US Corporate Bond Index saw a tightening of credit spreads by 9 basis points (BPs). This market movement led to the index outperforming duration-matched Treasurys by 98 basis points, resulting in an impressive total return of +2.60%. A basis point represents one-hundredth of a percentage point. This period was characterized by a favorable environment for corporate bonds, as indicated by the tightening spreads and strong benchmark performance.