‘Sometimes I agree with Donald Trump’s tweets’

Bond investors are traditionally nervous about stock markets or in search of regular income. But, since the 2008 financial crisis, interest rates have been at record lows. Bond prices have rocketed, dragging down yields, making them uninvestable for many.

Myriad challenges remain, but Jim Leaviss, manager of the £1.2bn M&G Global Macro Bond fund, believes there is money to be made from complex debt markets.

He has headed the bond department at M&G for more than 20 years and told Telegraph Money why he lost money after the December general election and how he agrees with President Donald Trump – but only on one issue.

WHO IS THE FUND FOR?

This fund invests in bonds around the world, so the bulk of the portfolio is held in foreign currencies. This works very well for people who want something other than the pound.

People use us when they are nervous about things like Brexit or politics and believe the pound will fall.

WHAT MAKES YOU DIFFERENT?

We give investors significant exposure to the American dollar, the Japanese yen, the euro and emerging markets.

We use a mix of broad economic analysis as well as looking at individual bonds on their own merits. My background is as an economist – I started my career at the Bank of England.

I look at the world, and stay aware of anything that can affect economies, things like the American elections or commodity prices in emerging markets.

I delegate bond selection to analysts and other fund managers.

Bond guru Jim Leaviss tells Jonathan Jones how he wins when the pound falls and why he backs America over Brexit

ARE THERE GAINS TO BE MADE FROM OWNING BONDS?

The bond market is much more about avoiding losers than finding winners. You’re never going to double your money or find the next Apple. Bestcase scenario is getting your money back with a steady annual income. The worst is you lose everything.

WHERE IS THE BEST VALUE AT THE MOMENT?

America. I don’t agree with Donald Trump on many things, and it is quite strange when he angrily tweets the central bank chairman, Jay Powell, saying American interest rates are too high. However, I have a little bit of sympathy for the president on that.

The economy is still growing, but we’re expecting a global economic slowdown due to coronavirus, Brexit and poor returns from Europe. So something needs to change.

WHEN HAS THE FUND DONE WELL?

We did really well in the 2008 global financial crisis. A lot of bonds issued by companies lost money, as businesses defaulted on their repayments. But we owned safer government bonds which actually went up in value. We also had “safe” currencies such as the Japanese yen.

We have also done well over the last three years, due to Brexit.

This fund doesn’t have a lot of investment in the pound so did well as the currency fell.

That comes with a flip side, of course. So when the pound rose after the general election, it was a big hit to our returns.

However, my worst trade in recent years was in January 2019. We made an investment thinking that bond yields in Europe would start rising from what we thought was a low point.

We held the bet for five months but yields kept on falling and the trade performed really poorly. We lost around £2.5m.

I also often sell bonds issued by businesses too early, and have lost out on making money. I am usually proven right eventually, and yields

£1,000 invested at launch would be worth £2,855 today