Don't Bail on Bonds Just Yet Says Prudential Fund Manager

For all the talk of the end of the bond bull market and higher rates, investors should not be shocked if their fixed income allocations make them a little money in the coming months. "Fixed income returns may very well continue to surprise investors on the upside due to the combination of stable rates, roll-down, generous credit spreads that may compress further, and relative value opportunities," said Mike Collins, portfolio manager for the Prudential Total Return Bond Fund (PDBAX) - Get Report . Collins said global growth is likely to remain sluggish due to aging populations and the global debt overhang. As a result, he said central banks are likely to remain accommodative, albeit less so on the margin, as the efficacy of low and even negative interest rates is increasingly being called into question. Developed government interest rates will remain range-bound at low levels, in his view. Finally, he said he is selectively investing in emerging market sovereign securities, while staying underweight highly rated industrials, which he deems too pricey.