"The market is very complacent right now in terms of the valuations," says Matthew Eagan, co-manager of the Loomis Sayles Bond Fund. Along with co-managers Dan Fuss and Elaine Stokes, Eagan has doubled its short-term U.S. and Canadian debt holdings to 27% of AUM - a bet government bond rates are about to move higher.
"The global economy is strong enough to support the Fed’s decision to continue the taper and eventually raise rates by the middle of 2015," says Eagan. "We want to be prepared for that to happen."
Eagan's fund has outperformed 98% of its peers over the last five years.