One Bond Fund Manager is Piling Up Cash Due to Pricey Market

The portfolio manager for this year's best performing multisector bond fund is having a hard time finding bonds to buy. "We see very little value in the market right now," said Henry Peabody, portfolio manager for the Eaton Vance Multisector Income Fund (EVBAX) - Get Report . Peabody said he is holding a lot of cash in his fund because the systemic and position risks are simply too high in the current market. Peabody attributes his outperformance this year to sticking with a lot of his winning bets from last year, notably in energy and commodity issues. And while he is not putting a lot of money to work in the current environment, he is seeing opportunities in emerging markets like Mexico. Peabody expects the Federal Reserve to raise rates in December, but proceed slowly from there. He said the transition to higher interest rates could cause a lot of pain for investors who are holding "far too much interest rate risk" in their portfolios.