Five Spot: Brady Sees No Treasury Bubble

SANTA FE, N.M. (TheStreet) -- Jason Brady, co-manager of the Thornburg Strategic Income Fund(TSIAX Quote), says he doesn't see a bubble in Treasuries and the dollar will remain the world's reserve currency as long as the government controls inflation.

The fund, which invests in international bonds and stocks, has risen 24% year-to-date, topping the 21% gain of the Morgan Stanley Capital International EAFE Index and the 13% advance of the S&P 500 Index. It's up 2.1% in the past year, while both indices lost value.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.

Which corporate bond issue do you like the most right now?

Brady:The one position we like the most is a tough call as we get income from a very wide variety of sources from mortgages, high-yield bonds, high-grade bonds, munis and foreign and U.S. governments.

I like NII Holdings(NIHD Quote) 3.125% convertible bonds. The current price is $81.50 for a 10.72% yield for around three years of risk. Cash on the balance sheet is significant, though that may be used for spectrum purchases. The bond is a busted, unrated convertible, so the universe of potential buyers is smaller than many other kinds of bonds.

Which dividend-paying stock is your favorite?

Brady:Again we don't have favorites as there are a number of interesting places to get qualifying income. We like Australia's Telstra outside the U.S. both for the stable business and for the currency exposure. Domestically, we like Annaly Capital Management(NLY Quote). It's a bond-like equity agency mortgage REIT with significant cash flows.