Bonds Are Now 'Extremely Risky': Fund Manager

Much has been made about the so-called "great rotation" of capital from bonds into stocks. One fund manager with about $10 billion in assets under management has been actively making this trade for clients.

"Economic conditions have vastly improved since the lows of the recession, yet interest rates haven't moved much," said Richard Saperstein, CIO of Treasury Partners, on CNBC's "Squawk on the Street." "For clients, we've been reallocating assets out of bonds and into stocks."

Saperstein added: "Bonds are an extremely risky investment right now, given where the economy is and the potential rise in rates."

"If we talk about the risk of stocks versus bonds, we have to calibrate it relative to historical averages," he said. Saperstein points out that for the last 50 years the 10-year Treasury has outperformed the S&P. Today, this relationship is reversed.

"There's a real mismatch between where the valuations of equities and bond yields are. In the past 5 years $1.1 trillion has moved into bond mutual funds and $400 billion has moved out of equity mutual funds," he said.

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"We have a long-term cycle ahead of us with economic improvement, we're going to see rising interest rates and improving stock values. We'll have higher multiples and that's where client assets should be allocated," he said.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from Squawk on the Street @ToscanoPaul