NEW YORK (TheStreet) -- Templeton Global Bond Fund (TPINX) - Get Report has long been known for making bold contrarian moves. Portfolio Manager Michael Hasenstab's investments range widely, emphasizing Japanese government bonds one year and Latin American securities the next.

Recently Hasenstab has been carefully avoiding U.S. Treasuries and bonds from most developed countries in Europe. Instead, he has been betting on emerging markets and holds big stakes in Brazil, Indonesia and Poland.

The Templeton fund's approach is very unusual. Most competitors in the world bond category have sizable holdings in the U.S. and Europe.

Lately Hasenstab's strategy has been working, however. With emerging markets rallying, the fund has returned 6% this year, outpacing 95% of its peers, according to Morningstar.

The strong showing is a big change from its performance in 2011. With emerging markets sinking last summer, the Templeton fund lost 2.4% for the year and lagged 96% of peers.

But more often than not, Hasenstab's moves have been right on target. During the past 10 years, the fund returned 10.8% annually on average, outdoing all its peers.

Speaking recently at the Morningstar Investment Conference in Chicago, Hasenstab explained that he is shying away from the developed world because of its big debt problems. Government debt in the U.S. equals 100% of GDP. In contrast, Indonesia's debt is less than 25% of GDP.

"Places like Asia are compelling because the economies are not indebted," he said. "A big part of our strategy is looking for yield without taking a lot of credit risk."

Hasenstab often takes currency positions. He is currently shorting the euro, betting the currency will fall as the European economy struggles.

At the same time, the fund is positioned to benefit from currency rises in Asian emerging markets, including Indonesia, Malaysia and Singapore. Because Asian economies are growing smartly, investors will push up the prices of their currencies, he said.

Hasenstab's biggest position is in South Korean bonds, where he has 16% of assets. His stance differs from some competitors who worry that the country's big export sales could suffer if the Chinese economy blows up or merely slows down.

Hasenstab argues that the fears about China are overdone. Although the economy has slowed from its double-digit pace, the Communist government will do everything it can to avoid a recession, he contends.

Chinese policymakers are lowering interest rates and increasing spending on infrastructure. The stimulus moves are already boosting the economy, he said. The government also stands ready to back up the country's banks if they suffer from increased defaults, he added.

"When you have $3 trillion in reserves, that is a pretty big insurance policy against having a banking problem," he said.

Another concern about South Korea is that it will become embroiled in a war with North Korea. Whenever the North Korean regime fires a missile or engages in a hostile act, prices of South Korean securities fall.

Hasenstab said that he uses the periodic downturns as occasions to load up on South Korean bonds. He believes North Korea is dependent on China and that the Chinese will not permit their client to start a reckless war.

Some of Hasenstab's most effective moves came during the downturn of 2008. Convinced that Europe would suffer badly in the financial crisis, he exited the euro and took a big position in the dollar and Swiss franc. Those bets paid off when investors sought safety in the stronger currencies. For the year, the fund returned 6.3% and outgrew 84% of peers.

The performance attracted the attention of investors, who flooded into the fund. Its assets are now $61 billion, up from $1.3 billion in 2005.

The massive growth has caused some shareholders to worry that the fund may have gotten too big to trade nimbly. But Hasenstab has argued that he can still maneuver easily enough to deliver winning returns -- and that there are lots of opportunities in world markets for him to exploit.

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.