Rate cuts in the US may mean we are at an inflection point in fixed income markets and, with that in mind, we thought it a prudent time to have a look under the bonnet of the most-owned fixed income funds among the allocators we cover.

Passive tops the charts in the global bond, and the government bond categories.

The most-owned fixed income fund of the lot is Vanguard’s UK Government Bond Index, which appears in 11 of the portfolios we monitor.

This is a £4.72bn mandate which underperformed its peer group, IA UK Gilts over three and five years, but has performed much more strongly in the past year, and is top quartile. 

The implication there is that the fund was longer duration than its benchmark, when that was the wrong place to be. The three largest exposures are bonds which mature this year or next, but beyond that, the maturity is a decade or longer. 

A passive fund is owned by 10 of the allocators we cover, the Vanguard Global Bond Index, which is £118bn in size. 

It has achieved a return of 0.48 per cent over the past five years. 

It is 60 per cent allocated to government bonds, with the debt of France and Germany (ouch and ouch) the top two holdings. 

Away from the government bond space, there is an allocation of around 10 per cent to mortgage-backed securities, so those rate cuts could come in very handy. 

In the actively managed fixed income space, the most popular strategy among the allocators we cover is M&G’s Emerging Markets Bond fund, which also appears in 10 portfolios. 

This is a £1.5bn strategy run by Claudia Calich, a manager so long-serving that when she began Breaking Bad was on TV and Frozen was in the cinemas. It has returned 9 per cent over the past five years, placing it firmly in the top quartile of funds in its peer group. 

Curiously it has had a poor quarter, being bottom quartile, during a period when lower rates should be boosting the returns of the asset class as a whole. 

The fund is 73 per cent in government bonds, and among its top 10 exposures is an investment in Brazilian national debt.

And here’s the rub, while the big developed market central banks are cutting rates, Brazil’s base rate has gone up, and while investors are raising a tentative glass to the prospect of a soft landing in the US. Many Latin American economies are pondering their prospects if commodity prices continue to decline in the face of Chinese retrenchment.