HERE IS WHERE INVESTORS ARE LOOKING FOR INCOME OUTSIDE OF BONDS AS RATES RISE Advisors are cutting duration and adding income sources that are not fixed income at all, per CNBC: - Catastrophe bonds: insurance-linked securities that pay investors to absorb natural disaster risk, historically mid-to-high single digit returns, negative in heavy catastrophe years - Master limited partnerships: midstream pipeline and storage funds yielding close to 7% - Preferred stocks: broad preferred income funds yielding around 6.5% - Asset-backed lending: private managers lending against rail cars, gas wells and hard collateral, generating tax-deferred yields of 6%-10%, per Robertson Stephens CIO Stuart Katz - Merger arbitrage: capturing the gap between a deal announcement and its close, with returns uncorrelated to rate risk - Dividend-paying stocks and REITs None of it is free. There is "a tradeoff between adding income from other sources and adding other risk," said Matt Gentzkow of Coastal Bridge Advisors. Several of these are rate-sensitive themselves. Janney CIO Michael Crook says MLPs are a much harder case with the 10-year in the upper 4% range than when it paid 1%.