DoubleLine Capital is cutting its holdings of the riskiest tier of investment-grade bonds as a defensive move, as it braces for bond yields to gyrate and for high borrowing costs to potentially weigh on corporate earnings.

The $95 billion asset manager is broadly positive about high-grade debt but is selling BBB rated bonds and staying away from small regional lenders hit by the troubled commercial real estate sector, said Robert Cohen, head of global developed credit at DoubleLine. He's instead boosting his cash position to tactically take advantage of volatility over the next several months.

"I don't think rate volatility is over," Cohen said in an telephone interview. "We have tight spreads, so there's not a lot of room for error. If rate volatility continues, I think spread volatility might pick up."