NEW YORK (TheStreet) -- The yield on the benchmark 10-year Treasury bond has climbed above 2.3%, up from 1.7% in January. But according to David Wright, portfolio manager for the Sierra Core Retirement fund, that rise can't be sustained. 

"A sustained rise in interest rates can only take place when you have inflation well above 2% for more than a few data points, GDP above 2% for more than a couple of quarters and household income steadily rising," he said. "We are not seeing any of those things right now so we think a sustained rise in rates is years away."

As a result of his skeptical view of the economy, Wright has his heaviest positions in municipal bonds, saying there is untapped value there as well as safety. Since his mutual fund is comprised of other mutual funds, he said he is relying on his respective fund managers to steer clear of landmines like Puerto Rico and Illinois municipal bonds.
 
"Every manager we use is skillful enough to divest quickly when they get worried about something," said Wright.
 
Wright's fund also has about a 10% weighting in high-yield, once again relying on his fund managers to steer clear of troubles in the energy arena which pulled the sector down late last year. Wright uses his high-yield allocation as a proxy for common stocks, which he views as risky at this juncture with the S&P 500 index hitting new highs.
 
"If you look at cycles over the past 70 years and if you look at the Shiller 10 year price-to-earnings multiple as a predictor of valuation, it is a pretty good predictor of how deep the next cycle decline could be," said Wright. "And if history is any guide that could be over 30%."
 
As to what would spark a selloff of that magnitude, Wright said the market may not see one.
 
"Market tops often happen without a catalyst," said Wright. "Think of the crash of 1987 and the peak in 2000, those were not sparked by catalysts. You just have to  be ready."

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