Are Europe's low bond yields a bargain?

With quantitative easing on the cards, Europe's already low interest rates are set to fall further, but some fund managers believe the continent will offer the best bond returns.

"It's not so much that the higher the yield, the higher the total return," Todd Youngberg, global head of credit at Aviva (ASX:DSX-AU) Investors, told CNBC. "Lower-yielding Europe [high-yield credit] will outperform the higher-yielding U.S. and Asian markets."

He expects U.S. high-yield bonds will face headwinds not just from expectations the U.S. Federal Reserve will tighten policy this year, but also because of the segment's high weighting toward the energy sector, which has tumbled amid oil's price plunge since mid-2014.

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Around 14 percent of the holdings of the iShares iBoxx high-yield ETF (NYSE Arca: HYG), which tracks the Markit iBoxx index, are in the oil and gas industries. Oil prices have plunged more than 50 percent since mid-2014, dropping to their lowest levels since 2009.

Youngberg doesn't expect Asia high-yield will fare much better than its U.S. counterpart, with sentiment "quite poor" after China property developer Kaisa (Hong Kong Stock Exchange: 1638-HK) missed a bond coupon payment earlier this month.

Yields in Europe may already be plumbing record lows, but they may slip even further if the European Central Bank (ECB) unveils a bond purchasing program, known as quantitative easing (QE), at its meeting Thursday, as is widely expected. Bond prices move inversely to yields.

"This is going to be a massive positive for overall yield spreads," Youngberg said, adding that the ECB is likely to purchase sovereign bonds as well as potentially including investment-grade corporate bonds.

The move may also spur U.S. companies to issue in euros to take advantage of the around 200 basis-point yield differential across the pond, especially with U.S. rates likely to rise this year, he said.

Youngberg isn't alone is seeing opportunity in European high-yield bonds. Societe Generale (Euronext Paris: GLE-FR) is also advising moving into the segment as the ECB heads toward QE.

"BBBs credits offer a very large pick-up relative to the Single-A area of the curve," it said in a note Tuesday.

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Citigroup (NYSE:C) also expects European credit to rally, but says it'll be a "last hurrah." If the ECB buys corporate bonds, spreads will likely tighten by 35-45 percent, it estimated in a note last week. It advises going toward lower quality credits as QE will likely "trickle down" to boost the segment, with further gains in investment-grade credit likely limited.

"With spreads within striking distance of their 2007 tights and yields in the vicinity of 1 percent, it becomes mighty hard to envisage any positive scenario for investment grade credit," Citigroup said. "We remain long euro (Unknown:EURBA=) credit over British pound (:GBP1M=) and U.S. dollar credit for now, but would look to reverse later in the year."

To be sure, not everyone is convinced European yields will react much to QE.

"A big move lower in [yields of] European sovereign bonds has already occurred," Nomura (Tokyo Stock Exchange: 8604.T-JP) said in a note last week, noting the 10-year German Bund (Germany:DE10Y-DE) yield went from 1.95 percent at end-2013 to around 0.48 percent currently. "There is only limited room to move lower."

-By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1