After Guinness Global Investors launched the Irish-domiciled Guinness Global Dynamic Bond Fund in July, the firm sets out its views at a time when bond market yields have been increasing in a number of countries.

Bond markets have undergone an historic repricing, leaving 10-year government bond yields near multi-decade highs and real returns positive.

At a media event in London this month, Craig Veysey, portfolio manager of the Guinness Global Dynamic Bond Fund, at Guinness Global Investors, emphasised the benefits of US, German, Japanese and UK 10-year government bond yields. 

UK gilts are delivering yields of 5.4 per cent, Germany over 3.5 per cent and Japan above 3 per cent. Veysey invests in developed countries, notably the US, the UK, parts of Europe including Germany, Japan, Australia and Canada. In the same manner as Kevin Thozet, a member of the investment committee at Paris-based asset manager Carmignac, Veysey is positive on Japanese long-term bonds.

“Although inflation has been moderating and policy rates [have] fallen, recent energy volatility and rising growth risks have made the opportunity set for active bond investors more compelling,” he said at the event. “For investors, this represents a rare entry point, the chance to lock in higher starting yields with genuine flexibility across the fixed income spectrum.” 

The Guinness Global Dynamic Bond Fund invests globally across government bonds, investment-grade credit and selective high-yield bonds. The fund has been designed to identify undervalued bond investments with clear catalysts, actively manage duration, credit and currency risk through the cycle, and compound attractive income over the long term. Veysey joined in March 2026 to manage the firm's global fixed income offering.

The strategy aims to deliver attractive long-term total returns through three complementary drivers: resilient income, value-driven credit selection, and a dynamic macro overlay to potentially enhance returns and manage downside risks. Portfolio characteristics include yields above 6 per cent, investment grade quality and duration actively managed between 0 to 10 years.

Veysey highlighted credit investment examples at the event, such as Tesco. He has been an investor in Tesco since its downgrade to high yield. The management desire is to reduce leverage and regain investment grade status in several tenders for Tesco debt since 2017, he said. He bought the position based on attractive valuations and expectations of a return to investment grade. It makes up 4.3 per cent of portfolio weight.

A point that investors grapple with is how the gain to the "risk-free" rate, as defined by paper such as short-dated US Treasuries, might at some point dent the case for holding equities. The challenge is working out whether higher bond yields presage forthcoming financial difficulty, or are pricing in more buoyant economic growth in countries such as the US, and therefore positive for stocks. (Morgan Stanley Investment Management recently made this point.)

Multi-decade highs
Wrapping up, Versey said government bond yields are at multi-decade highs and provide attractive relative valuations, but debt dynamics and growth inflation uncertainty can lead to continued volatility. Credit spreads are near historical tight levels, but fundamentals and flows remain constructive and all in yields are supportive. He is highly selective in investment-grade credit quality opportunities and cautious in high yield.

Veysey also noted that the euro is to remain under pressure from fiscal concerns in the near term, ahead of various elections, notably in France and Italy next year.  

In a similar vein, David Zahn, head of European fixed income at California-headquartered investment manager Franklin Templeton, is also underweight in France and Italy, due to the elections next year, political uncertainty and high debt levels. Zahn is overweight in German and Spanish bonds.

Zahn argues that bonds now pay a reasonable yield to investors. “Before, equities gave a better return but now bonds are becoming something people are looking at,” he said. See here.

Meanwhile, Martin Reeves, head of high yield at Mediolanum International Funds (MIFL), said at a recent event in Dublin that the risk of defaulting in the high yield market has been the lowest it has ever been. “The returns won’t be as high but the risk is lower,” he said. He is overweight in UK high yield, as it is an unloved market and cheaper than others. “We like Boots, Iceland, David Lloyd Centres, and Stonegate that are performing well. The UK economy is actually performing well for these companies. If the UK economy goes into recession, these companies would be badly hit, but we don’t think that will happen,” he continued.

“We are underweight in French high yield. Most of the companies are actually fine but it’s uncertain what the economic outlook will be and the prices are too high. If the prices were lower, I would invest in them. I am neutral on German and Italian high yield. We are also underweight in the US as prices are too high and overweight in Asia. We prefer the UK, we prefer parts of Europe and parts of Asia and Latin America,” he said.