Portfolio manager Mark Lindbloom expects rates to rise modestly in the second half of the year and that's why he is paring back his Treasuries position in the Western Asset Total Return Unconstrained Bond Fund after months of strong gains. Lindbloom also said it is beneficial for him to be in an 'unconstrained' bond fund, as opposed to being tied to a specific index, because it gives him flexibility to find yield globally in the low rate environment. Finally, Lindbloom is bullish on non-agency mortgage backed securities because they offer attractive yields in a rapidly improving housing market.

More from Video

Venture Capitalists Are Still Feverishly Searching for the Next Facebook

Venture Capitalists Are Still Feverishly Searching for the Next Facebook

Stocks Move Lower on Trade Fears and 4 Other Stories You Must Know Wednesday

Stocks Move Lower on Trade Fears and 4 Other Stories You Must Know Wednesday

10 Seconds to Genius: Lowe's New CEO Marvin Ellison

10 Seconds to Genius: Lowe's New CEO Marvin Ellison

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

NYSE's New President: On a Mission to Attract Talent to Wall St.

NYSE's New President: On a Mission to Attract Talent to Wall St.