"We consider REITs to be fairly valued. Their biggest driver is employment growth. We have an overweight [portfolio distribution] in the U.S. REIT market," said Finnegan, of Principal's Global Diversified Income Fund.
In a separate interview Thursday, Finnegan shared his top picks with CNBC.
"I like Champion REIT because it pays a 7.2 percent dividend yield, whereas the average for global REITs is 5 percent." Champion REIT invests in office and retail properties in Hong Kong. US investors can buy Champion as an ADR ,
In the U.S., Finnegan is focussing on energy. "Plains All-American Pipeline is a major player in shale gas. It only has a dividend yield of 5 percent now, but the distribution forecast is for 8-9 percent," he said. The company has invested $5 billion in future projects to aid in the transportation, storage, and marketing of crude oil and natural gas.
DTE Energy is based in Detroit and supplies two-thirds of Michigan with electricity and natural gas. "If inflation goes up, they get to charge more. Regulators allow that for utilities," he added.
Natural gas, however, is what mainly interests Finnegan when it comes to U.S. energy stocks.
"The change is coming. We have it. It's cheap, and we will fuel our cars with it."
Additional News: Plains All American Bids on SemGroup
Additional Views: Cramer Goes Shopping For REITs
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Mike Finnegan does not personally own shares in DTE, PAA, or Champion. However, these securities are included in Principal Funds Group's portfolio.