NEW YORK (TheStreet) -- Concerns about liquidity in the high-yield market are real but should not keep investors from increasing their exposure, said Don Plotsky, head of the product group at Western Asset Management.
"The market dynamics have changed as the banks have been starved for capital on trading desks. So they are not there to step up when things get difficult in the market. That's really more of a technical concern about high yield," said Plotsky. "The day will come when there is stress in the market and high yield trades off because of that stress, but what we really focus on are the fundamentals of the issuers in the market."
Plotsky added Western has a list of bonds that it will scoop up when they trade off in the market. In his view, investors should trust its seasoned portfolio managers to find those issues instead of running away from the asset class entirely.
The Western Asset High Yield fund is up 1.1% year to date and sports a trailing 12 month yield of 6.5%, according to fund-tracker Morningstar.
As to the energy sector, which sank the entire high-yield market in the fourth quarter of 2014, Plotsky said many oil companies with solid financials were unnecessarily sold off in a panic. He said his fund managers keep an eye on those companies with businesses that are not particularly sensitive to the price of oil.
"We meet with management and we understand their businesses," said Plotsky. "Those issuers have traded down along with the broader energy universe and that really gives us an opportunity to acquire the debt of those companies when the market trades off at really attractive prices."
Regarding the so-called end of the 30-year bull market in bonds, Plotsky said investors should not overreact because bonds will always maintain an important place in a portfolio, not just for yield but safety. He doubts the idea that rates will skyrocket anytime soon, forcing the hands of bondholders.
"There is nothing on the horizon today that is going to meaningfully change inflation," said Plotsky. "The Fed will continue to remain accommodative."