5 top money managers’ favorite trades for 2015 by Chris Matthews @FortuneMagazine April 27, 2015, 2:22 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons When billionaire investor and co-founder of Apollo Global Management Joshua Harris tells you “everything is overvalued,” it might be time to choose your investments carefully. With equity and debt markets overvalued, Harris says money managers have to get creative. That means looking at company debt that’s not rated by the big rating agencies, or strategically investing in the debt of distressed companies that may rebound, or at least repay more of what it owes than the market expects. On Monday at the 2015 Milken Institute Global Conference in Los Angeles, Harris wasn’t the only one speaking on a panel of investors arguing that markets are expensive. Some of the world’s most successful money managers discussed the recent return of volatility to global financial markets and gave their advice regarding where investors can still park their money without getting burned by the threats of whipsawing commodity prices and the uncertain prospects of economies from China to Europe. Here are some of their ideas: Buy European stocks, but short European government debt Alexander Friedman, Group CEO of GAM Holdings, argues that short-term factors like the recently-launched European QE program will buoy European Union stock markets in 2015, but that European debt has nowhere to go but down. “The German bund is the biggest bubble in existence right now,” he says. U.S. assets are your best bet right now Carey Lathrop, managing director at Citigroup, says U.S. corporate and government debt might look expensive, but those bets are still more attractive than their European counterparts. Lathrop sees U.S. growth continuing to be best-in-class in the developed world, and argues that investors can gain an edge by looking at structured products, such as collateralized loan obligations (CLOs) that got a bad rap after the financial crisis. “The stigma is probably why they’re so cheap,” says Lathrop. Buy Japanese stocks and short Euro Bonds Alan Howard, co-founder of Brevan Howard, agrees with Friedman. Howard says that most European government debt is far too expensive. “The idea that you’re paying governments to hold onto your money is crazy,” he says. His short-term bet is Japanese stocks, pointing to the economic stimulus program Japanese Prime Minister Shinzo Abe has launched to goose his country’s economy. While Howard isn’t necessarily confident that Abe’s plan will work in the long run, he sees Japanese stocks continuing to rise in 2015. Watch the M&A market closely Joshua Friedman, Co-CEO of Canyon Partners, says while expensive stocks and low rates make the investment landscape difficult to navigate, it has and will continue to motivate managers to look for acquisitions and finance buybacks. “Many of these event-oriented investments are very attractive,” Friedman says.