Where investors are finding income outside traditional bonds as rates rise

Traders work on the floor of the New York Stock Exchange (NYSE) on September 09, 2026 in New York City.Spencer Platt | Getty ImagesFor some investors, uncertainty in the bond market and a relentless rise in rates driven by inflation, geopolitical concerns and other factors is enough to throw in the towel, or at least significantly limit their exposure to fixed income.While many advisors and strategists said bonds should remain part of a diversified investment portfolio, they are shifting allocation to lower-duration alternatives such as ultra-short bonds. Others are looking for complementary non-fixed income products for investors who want less exposure to bonds. "There are certainly a host of alternative strategies that can create current income in a portfolio," said Tyler Glover, managing director of private wealth management consulting services at William Blair.These options include insurance-linked securities, master limited partnerships, covered call ETFs, dividend-paying stocks, REITS, preferred stocks, asset-backed securities and merger arbitrage trades.To be sure, there are caveats when investing in any of these options. "If you're trying to generate alternative paths to in...