Why fixed income has stopped being the boring part of your portfolio

If you’ve been paying attention to fixed income over the past couple of years, you’ll know the narrative has shifted dramatically. For a long time, investors have seen bonds as the ballast you held to offset equity risk, not something you actually got excited about. That story has now changed, with rising rates handing income investors genuine yield. Alongside this, it has given renewed reason to take fixed income seriously on its own terms. In the interview above, I sat down with Mark Bayley, portfolio manager at Kapstream Capital, to talk through how the team is navigating a market that's been anything but quiet. From the Iran-driven oil price shock and its inflationary ripple effects, to the surge in new issuance from AI hyperscalers, there’s no shortage of moving parts for fixed income investors to contend with right now. However, Bayley’s view is that volatility has created as many opportunities as it has risks; provided you have the right framework to exploit them. “Fixed income investors are actually getting yield and getting return,” he says. “That’s not just to balance out the risks of equity, but it’s a significant part of their portfolio that’s actually generating yield and return.” It's a simple point, but it captures something important about where we are in the cycle. TIME CODES 00:00 – Why fixed income markets are grabbing investor attention 01:32 – How investor appetite for fixed income has changed 02:33 – Why rising yields are making equities harder to justify 03:11 – How Kapstream has been adding to credit spreads 04:44 – Kapstream's approach to downside protection 06:11 – How liquidity is managed within the portfolio 07:41 – Managing duration in a volatile rate environment 09:10 – Navigating the surge in new issuance 11:07 – The outlook for income investing