NEW YORK (TheStreet) --Kevin Lorenz, manager of the TIAA-CREF High Yield Fund (TIYRX) - Get Report, says high yield bonds from the likes of Lamar Advertising (LAMR) - Get Report and Warner Music Group (WMG) - Get Report offer investors a great deal of value.

The $632 million fund, which has earned four stars from

Morningstar

(MORN) - Get Report

, has returned 25% during the past year, outperforming the 8% increase in the

Barclays Capital Aggregate Bond Index

. The fund has increased 5.3% annually during the past three years, beating 85% of competing funds.

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Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market.

Are high-yield bonds a good place to be now?

Lorenz:

High yield offers effective long-term value. Spreads are basically at their 10-year average at the same time that corporate fundamentals are improving and the default rate is declining very quickly. So we think that for long-term investors, there is good value in the market.

Are you seeing the same volatility in the high-yield market that we're seeing in stocks?

Lorenz:

There is high-yield volatility, and that's always been the case, it's really nothing new. We think it's important for investors in high-yield bonds to have a long-term horizon because, over the long-term, the prices cancel each other out and you're left with a very effective return. Sort of the like the old saying in the stock market: "In the short-term, it's a voting machine, and in the long-term, it's a weighing machine." And our fundamental analysis is our weighing machine.

One of your favorite high-yield issues comes from Lamar Advertising. It's in the billboard business. Why do you like that one?

Lorenz:

They're one of the largest billboard companies in the country. They're a very well-run company and it's a business with a very high barrier to entry and consequently, they have very high profit margins. They can also grow through digital billboards, which have even higher profit margins. The company has always been very prudent with its use of leverage. Right now, they're committing to paying down debt.

Another high-yield issue that you're pretty high on is Warner Music. Why do you like that one?

Lorenz:

Warner Music Group is a company that we don't think the market is giving proper credit to. They have very substantial and stable cash flows. They have one part of their business, recorded music, where their revenues have been declining and people are worrying about that. But they also have digital revenues, which are growing nicely. The company has good cost controls and a variable cost structure, so cash flows have been very resilient.

On top of that, they have a music publishing business, which is very stable and profitable. If they ever needed to, they could sell that for a lot of money.

In energy, why do you like

Atlas Energy

(ATLS)

?

Lorenz:

Atlas Energy is a gas developer in Pennsylvania. They've been drilling there for many years, and they're fortunate that there has been a recent discovery on their property. It's called the Marcellus Shale. By using new technology, the company is going to capitalize on a vastly increased reserve base. They company is also receiving a $1.7 billion equity investment and executives have committed to use it to pay down debt and to fund future growth.

--

Reported by Gregg Greenberg in New York

.

Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.