'A Market in Transition'

Natixis Global Asset Management

Companies have "cash on their balance sheets," and are in "better shape than they've been in decades," Gaffney says. While investment grade bonds are "attractive, but have limited upside," she says, high yield bonds in the "upper tier, BB and B" credits, are a "great long-term value--really, the sweet spot in the market."

"Clipping coupons is attractive in a high-risk environment," Gaffney says. But while she says that risk of rising rates is not a short-term concern, she cautions that this isn't the time to be buying the longest maturities. So where does she think there's potential for appreciation? "Exposure on the currency side works to our advantage short term and long term...If [we are] facing rising rates, we've got to be smart about how we're investing. Currencies have the ability to appreciate in rising-rate environments."

On the Equity Side

With the "domestic recovery," says Dennis Alff, there's "not a lot of staying power, and the stimulus program [has been] a bigger part of the original recovery than originally expected." The co-portfolio manager of the Vaughan Nelson Value Opportunity Fund, (VNVYX for the "Y" shares), Alff adds he isn't troubled by the risk of inflation or "nasty, nasty deflation," right now. "The markets may slog along and be potentially range bound." For "value guys, [this is] interesting stuff."

With the equity market at a "13.5 [multiple] before the Sept. run," risk is probably "to the upside; multiple compression probably already occurred." However, "we're at peak margins--that's hard to sustain. Margin risk is probably to the downside. That gets me very excited as a portfolio manager. That's a stock picker's market." He adds: "Companies that can control margins [can] really grow." We are "coming back to the rebirth of the stock picker."

Friday: The view from Khalid Gayer, CEO and CIO Westpeak Global Advisors, and co-portfolio manager Westpeak ActiveBeta Equity Fund, and Francisco Alzuru, portfolio manager of the Hansberger Emerging Latin America Fund.

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