Wells Fargo's star manager Margie Patel explains how to generate yield amid low interest rates

Market-topping portfolio manager Margie Patel believes long-term investors need to take more risk in order to generate income and growth in the current low-rate environment. Wells Fargo's Patel said conservative investors, who are being punished in this environment, need to dial up their risk for the foreseeable future, by increasing their allocation in equities or high-yield bonds. Patel manages the five-star rated Wells Fargo Diversified Capital Builder Fund (EKBYX) with $1.2 billion in assets under management. The fund has topped the market over the five-year, 10-year and 15-year periods. "I think people really have to rethink their approach to risk-free investments and how much income they are willing to give up in order to be risk free," Patel said in the latest installment of CNBC PRO Talks with Leslie Picker. "The zero interest rate policy that the Fed is pursuing is putting a real penalty on conservative savers and that's the reality." Patel also revealed which sectors she likes and which ones investors should avoid. Here's the PRO talk replay: Investors need to shift and put less emphasis on Treasuries or to lay more emphasis on riskier volatile assets such as equities and high-yield bonds where investors get more yield, Patel said. "The old model simply isn't going to work for investors," she said. "I see no sign in the next few years that this will change." Semiconductors The money manager said she likes semiconductors for their secular growth as well as the cyclical tailwind in the near term. Patel highlighted AMD , Nvidia and Qualcomm as some of her picks in the space. "The cyclical upswing is still intact and we think they still will be very attractive in the next year or two as global activity springs around," Patel said. Chipmakers have evolved into much higher quality stocks over the years, some of which offer attractive dividends, she said. "In contrast to the internet bubble back around 2000, these companies are completely different animals — positive cash flows; many of them pay very attractive dividends," Patel said. "For an all round investment, they are pretty attractive." Big banks Patel is less bullish on big banks. While they remain quality companies, a slew of lower-cost competition in the loan and mortgage space means that large banks could have a harder time generating high growth, the manager said. "It's hard for me to see any above-average growth from the big bank sector," Patel said. "A lot of the incremental earnings will come from the cost-saving side." She added that some of the off-balance-sheet activities big banks used to conduct to generate revenues have been severely regulated and curtailed. Renewables Even though renewables have expanded rapidly in the past year, thanks to a greater emphasis on sustainable investing, Patel believes the companies in the space are too reliant on government subsidies for growth. "I'm not really keen on renewables and the reason is so much of that activity is dependent on government subsidies," Patel said. "I'd rather just frankly invest in a company that is profitable on its own." Over the last year, many utility companies have disappointed investors with their initiatives in the clean energy space.

Market-topping portfolio manager Margie Patel believes long-term investors need to take more risk in order to generate income and growth in the current low-rate environment.

Wells Fargo's Patel said conservative investors, who are being punished in this environment, need to dial up their risk for the foreseeable future, by increasing their allocation in equities or high-yield bonds. Patel manages the five-star rated Wells Fargo Diversified Capital Builder Fund (EKBYX) with $1.2 billion in assets under management. The fund has topped the market over the five-year, 10-year and 15-year periods.

"I think people really have to rethink their approach to risk-free investments and how much income they are willing to give up in order to be risk free," Patel said in the latest installment of CNBC PRO Talks with Leslie Picker. "The zero interest rate policy that the Fed is pursuing is putting a real penalty on conservative savers and that's the reality."

Patel also revealed which sectors she likes and which ones investors should avoid. Here's the PRO talk replay: