With the Federal Reserve continuing to be "predictably non-committal," expect Fed-driven volatility this year, especially in the fixed-income and Treasury markets, fund manager Brad Friedlander told CNBC on Tuesday.
That means investors need to tread carefully, he said in an interview with "Power Lunch."
"As a bond investor, I caution most bond investors to stay away from gambling on interesting rates at this point in the cycle," said the manager of the five-star Morningstar-rated Angel Oak Capital Multi-Strategy Income Fund.
Friedlander believes there are better opportunities in the credit markets within fixed income, like non-agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities.
"All of those offer higher income, a way to carry through so much of the volatility that we expect this year and even into next year and transition to a point when rates eventually do climb," he explained.
As for those concerned about a repeat of the subprime mortgage crisis, Friedlander said this time is different.
"This is a completely new version, where the borrowers are putting down so much more from a percentage standpoint—20, 30 sometimes 50 percent down—and the credit scores are 100 points higher than they were 10 years ago," he said.