Atteberry doesn't like Treasuries. "These are unsustainable [low] interest levels, with rates manipulated by the Fed's buying 30-year" debt, he says, referring to the Fed's plan to buy long-term Treasuries. Right now, outstanding Treasury bonds equal 60% of U.S. gross domestic product. By the end of 2010, they'll be 100%. That's about equal to the debt levels in such shaky economies as Italy, Greece and Sri Lanka. The fund, which can't have more than 25% of its assets rated below double-A, does come with a couple of caveats. Although it has a low expense ratio of 0.61%, FPA has a front load of 3.50%. And Rodriquez, who's never had an annual loss since taking over the fund in 1984, will take a one-year sabbatical next January. However, Atteberry, who's been with FPA since 1997, is a bond veteran who's expected to keep to the same strategy. The two shared Morningstar's fixed-income manager-of-the-year award for 2008.

Irving doesn't plan to take big chances. He aims to keep 80% of the fund (FGOVX) in government bonds, FDIC-insured debt, government-guaranteed Ginnie Mae CMOs and pass-throughs, and other agency debt. The fund won't buy riskier assets to chase incremental yield. The Government Income fund, which sports a very low 0.45% expense ratio, is designed to provide "steady income, and is a counterweight to the equity component of a diversified portfolio," says Irving. It certainly played that role convincingly in "08.

Legg Mason was able to mitigate losses by buying a lot of pre-refunded munis last year -- refinanced municipal debt that uses its proceeds to buy Treasuries to be held in escrow, from which they pay interest and principal on the original issues. After the brief rally, yields have begun to creep back up near 6%, a level Deane finds "very cheap." The portfolio manager, who's been with the fund since 1988, recently has been buying essential services' revenue bonds and general-obligation bonds from states and cities "that have the wherewithal and political will" to balance their budgets. Among them: New York City water bonds.

Gundlach has about half his fund in government-backed bonds like Ginnie Maes, Fannie Maes and Freddie Macs, yielding 4%. The other half is invested in nonguaranteed senior mortgage bonds, which carry more risk -- but also an average yield of 18%. "Incrementally, we're finding entry points for triple-A" mortgages because investor fear of delinquencies is very high. A bond originally rated triple-A with 1% to 2% delinquencies, considered "money-good," might fall from par to 90 cents on the dollar, yielding 7.5%. But a mortgage bond with 5% delinquencies drops to 60 cents on the dollar, in part because the credit agencies drop their rating at this trigger to single-B, which is noninvestment grade. Of course, one man's junk is another man's treasure, in Gundlach's view.

Investors seeking a larger playground might consider the $10.4 billion Templeton Global Bond Fund. While the U.S. credit markets froze, this fund (TPINX) gained an impressive 6.3% last year, with investments in sovereign issues from France, Sweden, Korea and Russia, and with a heavy concentration on the credit ladder of single-A, triple-B and double-B-rated bonds. "Last year is a prime example of the motivation for wanting global exposure," says Michael Hasenstab, portfolio manager. "People have a home-country bias in fixed income," he observes, but a well-run global fund has "lower total volatility." His fund has a five-year trailing-return record of a healthy 7.92%. The fund consists of three baskets: interest-rate markets, currency markets and sovereign-credit markets -- meaning sovereign bonds not issued in the country's own currency. The fund has a front load of 4.25% and an expense ratio of 0.92%. Right now, he's short the Singapore dollar because he believes it's vulnerable due to the local economy's heavy reliance on exports and finance. "It will have to devalue to compete," he says. He's also got a big position in the Mexican interest-rate market, where he expects more rate cuts.

"Rule No. 1: Don't blow yourself up!" says Vaselkiv, who has run the fund since 1996. The big drag on the market last year was securities issued by private-equity firms for leveraged buyouts. But Vaselkiv is conservative, and has a lot of higher-quality bonds, most rated single- or double-B, in his no-load fund, which has an expense ratio of 0.76%. In the last big recession, 1991-'93, his annualized three-year total return was 22.3%. Nearly 50% of the fund is in five sectors: health care, energy, wireless, utilities, and food and tobacco. He's got 10% in investment-grade bonds, and a similar amount in senior bank loans. Just 7% of his fund is invested in highly risky triple-C-rated junk. He also has some convertible bonds. "There's still an opportunity to make double-digit returns the next couple of years," says Vaselkiv. But tread carefully here.