Expectations that the Federal Reserve will raise interest rates later this year and concern about how the Fed will reduce its balance sheet holdings have led some portfolio advisors to deem fixed income too risky. The current low-interest-rate environment has also seen many investment advisors add riskier holdings in a reach for yield.

But there are still ways to play in the fixed-income space without taking on too much risk, said panelists at the Envestnet Advisor Summit in Chicago on Wednesday.

Tim Paulson, client portfolio manager at Lord Abbett, said that, overall, the fundamentals of the fixed-income market justify current valuations.

“Rates make sense given the global economy,” said Paulson, speaking as part of a panel addressing credit and its place in portfolios.

Those investment advisors looking for better returns may want to consider the corporate credit market, he said.

“Corporate balance sheets are in good shape.”

He pointed out that companies are refinancing debt to further improve their creditworthiness and that debt-to-equity ratios are low -- about 4.5 times earnings on average. He added that even outside the U.S. in the emerging markets, two-thirds of corporate debt is investment grade.

Those things present opportunities for active managers. But he said he would stay away from passively managed high-yield funds.

Mike Davern, senior market strategist at Nuveen, said his firm also likes corporate credit for the long term. The firm particularly likes the essential services health-care sector whose companies are rated between “BBB” and “AAA.”

Municipal bond markets are attractive, too, Davern said. The improving economies of many states and the income tax increases in a few such as Illinois, California and Minnesota have helped the muni market, he said. An increase in the top federal income tax bracket, and the additional income tax due under the Affordable Care Act, has helped with flows as well, he said.

“There have been 20 quarters in a row of increased state tax receipts,” said Davern.

Muni bonds also yield more than Treasury bonds, he said. Defaults in the muni bond market are rare, even though Detroit’s default made headlines. Out of a $3.7 trillion market, less than one-tenth of 1 percent defaulted in 2014, and as of 2015 there has been only one Chapter 9 filing.

Davern advised investors to do their homework when buying muni bonds if they are concerned about default risk. Nuveen prefers revenue bonds over general obligation bonds.

One area where many investors are underweight is in global bonds, said Yan Zilbering, investment analyst at Vanguard.

The best way to invest in global bonds is by hedging out the currency risk, which is something that is much cheaper to do now than it was in years past. Once currency risk is hedged, the volatility is reduced and the return on global bonds is similar to that of U.S. bonds, Zilbering said.

He pointed out that currency-hedged global bonds performed as well as U.S. bonds did during the global financial crisis, offering downside risk protection.

Finally, he said, since the early 2000s, the cost to hedge currency has fallen by about 50%.

“This is why these bonds have become much more appealing,” he said.