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NEW YORK (TheStreet) -- Low default rates and a slow-moving Federal Reserve will keep high-yield bonds aloft, says Jim Caron, Managing Director in Morgan Stanley Investment Management's Fixed Income team.

"Even with some problems in the energy sector, the growing economy is keeping the high-yield default rate low," says Caron, who also oversees the Morgan Stanley Global Fixed Income Opportunities fund. "Meanwhile, the Federal Reserve is currently removing excess accommodation -- not outright tightening -- and high yield will not be overly impacted until rates actually rise."

Caron originally forecast the first rate hike coming in September, but recently pushed it back to December as a result of the worse-than-expected March jobs report. The U.S. economy added only 126,000 jobs that month, breaking a 12-month streak of at least 200,000 job additions and falling significantly short of analysts' expectation of 250,000.

In addition to high yield, Caron also likes emerging-market bonds, which normally suffer when the Federal Reserve turns hawkish.

"As long as the Fed's rate-hike cycle is slowly paced, emerging-market debt still provides value," says Caron, adding that he prefers to hedge out currency exposure and maintain a long dollar overlay.

Finally, Caron contends that investors need to think differently about their fixed-income allocations now the 30-year secular decline in interest rates has probably ended. In his view, active management is of much greater importance when interest rates are on their way up, compared to passive management, which generally outperforms when rates drop.

One area where active management is particularly beneficial is Europe, according to Caron. In his view, diverging policies between the ECB and the Federal Reserve are creating buying opportunities for sovereign bonds in Southern Europe -- but not all of Southern Europe.

"We are finding bonds to buy in Spain, Portugal and Italy," says Caron. "But we are not chasing Greece. At least not yet."