How these pros would trade the Fed

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.

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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.

On Tuesday, Fed chair Janet Yellen testified before Congress that the central bank will not hike rates for the next few Federal Open Market Committee meetings. Wall Street has been expecting the first rate increase to occur midyear. However, since Yellen's testimony, Fed funds futures are now pointing to October as the probable month for liftoff.

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Scott Wren, senior global equity strategist with Wells Fargo Investment Institute, is sticking to his prediction that the first rate hike will come at some point between June and September. That said, he doesn't believe the timing is as important as the magnitude and speed of the hikes.

"You're splitting hairs whether it's June or September," Wren said. "What the market needs to know is how quickly are they going to raise rates? Are they going to do it fast? Are they going to skip a few meetings, which I think they certainly will, after they start?"

With that in mind, he still likes U.S. equities, particularly large caps. Investors should also take the moves in the U.S. dollar into account.

"Especially when you look at what the dollar's doing, I think U.S. stocks are going to be where you want to be. I think they're the global safe haven in terms of equities and I think we're going to continue to see the stock market do well this year," he said.

He suggests investors be overweight in industrials, technology and consumer discretionary.

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