Demand for investment grade corporate bonds may be high, especially from pension funds, but the asset class is not too pricey, said David Prothro, portfolio manager for the Fidelity Corporate Bond Fund. Prothro said supply is abundant, yet credit quality remains healthy because of economic growth. As for high yield, Prothro said he is not worried about a bubble at this time, nevertheless, if rates edge higher then junk bonds will likely be hit early and hard due to the heavy retail presence. Finally, he says the heavy regulatory environment is favorable to bonds issued by banks and other financial companies.

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