By contrast, the other intermediate-term fund on the Morningstar FundInvestor 500 list, PIMCO Investment Grade Credit Bond fund, has more than 10% in high yield, according to Morningstar. "That's why having that exposure to investment grade corporate bonds … at this point in the cycle is a tremendous value," he added. Meanwhile, the assets in the fund that are high yield are what Narayanan calls high quality, "mispriced securities." Those are the types of names that have recently been upgraded back into the investment grade space," he said. "We tend to use that capacity in high yield to add to those types of issuers before the upgrade, anticipating the upgrade."

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Persons: Morningstar, Paul Olmsted, Olmsted, Arvind Narayanan, Narayanan, VFIDX Organizations: Vanguard's, Fund, SEC, Morningstar, Oppenheimer, Vanguard, Credit Bond, CNBC Fed Survey, Fitch, Occidental Petroleum, Federal Reserve Locations: Detroit, Morningstar, Treasurys, Occidental