Tatjana Greil-Castro, global head of investments at fixed-income specialist Muzinich & Co., manages the roughly €10 billion Muzinich Enhanced Yield Short-Term Fund from London, which invests in corporate bonds maturing within two years. She has spent nearly two decades at Muzinich, having joined the firm after stints at Merrill Lynch, L&G, Fortis Investments and MetLife.
Greil-Castro sits on the European Central Bank's Bond Market Contact Group, and her emphasis on monetary-policy expertise is reflected in Muzinich's appointment of Thomas Jordan, who served as Swiss National Bank president from 2012 to 2024, as a senior advisor last year.
Longer-dated sovereign bonds across the US, UK and EU are offering attractive yields, yet she argues that yield must be assessed relative to duration. Long-dated government paper carries significant interest-rate risk and volatility, whereas the fund's strategy ensures 50 percent of holdings mature within two years. Government bonds are not the fund's primary competitive threat; cash and money-market funds are.
"Many investors are not aware that, because of inflation, they are exposed to continuous real depreciation of their liquidity," she said. The fund targets returns roughly double the inflation rate, accepting the risk that some issuers may default.
Duration limits default exposure, and the fund holds 60 percent in investment-grade paper where defaults are rare. In high yield, 25 percent sits in BB-rated bonds compared with just 5 percent in B-rated issues. The fund also conducts detailed debtor analysis and relies on broad diversification to contain the impact of any single payment disruption.
Spread compression between corporate and government bonds has drawn attention, but Greil-Castro contends that companies remain the stronger borrowers. States carry persistent structural deficits and debt is growing faster than economies, she said. "No company could conduct itself the way governments do."
She acknowledged the conventional rule that rating agencies rarely assign a corporate a higher rating than its home sovereign — Italian banks are a prominent example — but said she would still prefer a strong Italian company over Italian government bonds.
US debt levels have risen for decades without excessive market punishment, and some investors interpret recent yield increases as a sign of stronger growth expectations. Greil-Castro is more cautious. She recalled expressing doubts 25 years ago that Treasury markets were truly risk-free, and said she now sees signs of strain. She pointed to US Treasury Secretary Scott Bessent's announcement of large purchases of long-dated Treasuries as evidence, calling the volume small — "a drop in the hot pan" — and saying the US government was acting desperately and losing credibility.
Policymakers appear to bet that artificial intelligence will deliver a productivity boom that improves debt sustainability. Greil-Castro said the hypothesis rests on many conflicting assumptions. She expects AI to create more jobs than it destroys overall, but argued the growth boost would need to be extraordinary to offset the US's negative debt dynamics and large primary deficit. "I don't believe AI alone will solve the debt problem."
AI-related borrowing by hyperscalers such as Amazon and Alphabet has recently altered credit markets. The firms issued tens of billions in bonds after years of modest funding needs, and the resulting supply pushed their spreads wider than the broader market, creating what Greil-Castro called an "emission premium." She said the fund can selectively participate while keeping maturities short. Predicting outcomes in two or three years is manageable, she noted, but assessing a company like Amazon two decades out is far harder.
While the term premium should compensate investors for longer maturities, Greil-Castro argued it is currently insufficient to adequately reward the risk. She also noted that US Federal Reserve nominee Kevin Warsh has become almost likable to her, amid broader support for central-bank independence.
Greil-Castro spoke to finews from Muzinich's Zurich office, which recently moved from Tödistrasse to Sihlstrasse. She is Austrian and owns a farm outside London where she researches sustainable agriculture. Muzinich also maintains a presence in Geneva.
