NEW YORK (TheStreet) -- High-yield bonds have been selling off due to worries about the economy and valuation warnings from billionaire investor Carl Icahn. But Ken Sleeper, portfolio manager for the Sierra Strategic Income Fund (SSIRX) , said investors should view the next substantial pullback as a buying opportunity.

"Right now we are not allocated to high-yield bond funds, but we have our eyes on that asset class because we know that the world isn't going to be down forever," said Sleeper. "We know that eventually there will be a turnaround."

The Sierra Strategic Income fund is down 60 basis points this year, according to fund-tracker Morningstar. The multisector bond fund, which has a trailing 12-month yield of 3.4%, is made up primarily of fixed income mutual funds.

The first goal of the Sierra Strategic Income Fund is to protect capital by attempting to limit volatility and downside risk. Specifically, the fund managers attempt to limit declines to 4% or less, even in a month or quarter in which the market is very negative. The second goal is to produce satisfying total returns, with a goal to average 6% to 8% per year on average over a market cycle.

The Fed's decision not to raise rates is helping to cause a lot of the recent volatility in both the equity and fixed income markets in Sleeper's view. Savers, insurance companies and banks, for example, continue to suffer in a zero interest rate environment and generally conservative investors are being forced to buy risky assets. And it certainly makes it hard for Sleeper to achieve his total return goals without stretching for yield.

"Personally, I think their actions have been more destructive than constructive recently," said Sleeper. "I would have liked to have seen a tiny rise in rates. That would have been more productive for the market."

About a quarter of Sleeper's fund is in corporate bonds, although he says he has been trimming his exposure lately. He said he has been increasingly bullish on preferred stock funds, as well as municipal bond funds to increase yield while keeping principal safe.

"We look for portfolio managers that have experience," said Sleeper. "We monitor each of those mutual funds and if they fall beyond a certain point we just sell. We move to the sidelines."

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