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NEW YORK (TheStreet) -- Despite investors stuffing more than $600 billion into bond funds over the past three years, don't call it a "bond bubble", says David MacEwen, fixed-income chief investment officer at American Century Investments. Unlike technology stocks in the 1990s or condos in Florida during the housing boom, investors will get their money back as long as they hold their bonds to maturity.

MacEwen recently chatted with

TheStreet

about his favorite and least favorite fixed-income securities.

Do we have a Treasury bubble on our hands right now?

MacEwen:

We think not. We think that yields are likely to remain low in the foreseeable future because of slow economic conditions. Plus, there are some good reasons why investors are buying bonds. They are looking for safety, and as long as you hold bonds for at least a couple of years, then bonds will provide that safety.

Where is the best place to find yield right now?

MacEwen:

We like corporate bonds. Corporate America has done a fantastic job deleveraging, becoming more efficient. This of course is coming on the back of consumers because they have not been adding to their payrolls, which is where they are getting their efficiency gains from. But they are very profitable, so that's where we think the best opportunity is, and one of our biggest overweights at American Century in our bond funds.

If you are worried about inflation, and a lot of people are, is it better to be in gold or TIPS?

MacEwen:

Those are very different asset classes, and you might think about having some of both. TIPS are really the only asset that is tied to the change in direction in the CPI. So if the CPI starts moving up, you are guaranteed with TIPS to get extra yield in combination with your bond. Who knows what is driving gold to the prices we are seeing today? I wouldn't count on that alone to be your inflation hedge.

The general expectation is that taxes are going to rise in 2011. Is this the primary case for owning municipal bonds?

MacEwen:

There is the higher demand because of higher taxes. But there is also -- and I think this is overlooked -- a very good credit dynamic in the municipal market. You hear a lot of investors very concerned about munis, but municipalities will cut their budgets or sell their assets and do whatever it takes to balance their budgets.

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It used to be that all the risk was associated with emerging bonds and stocks. Now people are worried about munis and U.S. Treasuries. What's your view of emerging-market securities?

MacEwen:

The term "emerging" really doesn't describe countries like Brazil anymore. They have mostly emerged, so the credit quality has definitely been improving there. We see that there could be some good opportunities in those areas. It's about being selective. In addition to country risk you need to be aware of currency risk in that area too.

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Reported by Gregg Greenberg in New York

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