As Treasury rates set record lows, one of the largest dedicated bond managers in the world is bullish on corporate bonds as a way to increase yield.
Western Asset, a 2014 Morningstar best in class winner, manages $466 billion in dedicated fixed income assets.
Western Asset Total Return Unconstrained currently has an overweight to corporate bonds, both investment grade and high yield.
On the investment grade side, Western is overweight financial debt, which is continuing to benefit from bond-holder friendly regulation.
And on the high yield side, the unconstrained fund is overweight select energy companies.
Bellows thinks the yields on energy bonds make these a compelling investment.
"From a bottoms-up perspective, we believe there are opportunities in companies who are well-positioned to withstand the distress in the industry," Bellows said.
Bellows added that he looks for healthier balance sheets and those that have the tools to adjust to lower prices.
"A great example is Cal Resources which is a BB company with a good balance sheet that has a yield of near 9% on its 10-year bonds."