Investors hunting for yields in the volatile bond market can find income in a number of areas, but they should be careful to balance risk and reward. In the first half of the year, it is difficult to have a fixed income. Bond yields increase when prices fall. Back in mid-June, 10-year Treasury yields hit 3.48% – levels last seen in 2011. It was a painful time for investors holding this bond. in their portfolios, when their prices skyrocketed as the stocks fell. Interest rates have softened since then, with 10-year tenors now sitting at just under 3%. For investors looking for more attractive yields than they might find in government bonds, the opportunity may lie in investment-grade debt, high-yield corporate debt and mutual funds. main bonds. “There are more opportunities now than at the beginning of the year,” said Lawrence Gillum, fixed income strategist at LPL Financial. Corporate Credit Strategists prefer the corporate credit market for income and specifically focus on investment-grade debt. “We like investment-grade corporate bonds, and add that investors can afford it,” said Kathy Jones, managing director and chief fixed-income strategist at the Schwab Center for Financial Research. can maintain a relatively high credit quality and still see stable profits. For example, she notes that corporate bonds with a rating of A are yielding close to 4%. That’s “not bad in terms of risk-reward trade-offs,” she said. For example, Johnson & Johnson has an A2 rating from Moody’s, while Kimberly-Clark has an A2 rating by the same company. According to Gillum, this could be a particularly good opportunity if you can hold such bonds for a longer period of time. “If you can hold that position for the next three to five years, I think you’ll look back and see that this was a pretty good buying opportunity,” he said. High Yield Those looking to increase their risk levels for higher rewards can look further down the corporate credit rating ladder, where yields can easily go up to 6%. “This is typically a much more attractive rate of return than investors have been able to get over the past five to 10 years,” said Russ Koesterich, portfolio manager at BlackRock Global Allocation Fund. His team is focusing their efforts on the BB area, where investors can get good returns with reasonable risk. They are scrutinizing cyclical sectors like transportation and energy. The ICE BofA US Corporate BB Index, which tracks the performance of BB corporate bonds, currently yields 5.07%. Investors willing to reduce credit quality may find higher yields, but they will have to take on more risk. Back in May, Fitch Ratings confirmed long-term issuer Ford Motor’s default rating was BB+. Meanwhile, T-Mobile has a BB rating from S&P. “The higher you get, the more risk you take as equity,” says Koesterich. Additionally, as the economy slows, lower-rated companies will struggle more to keep up and potentially default. The US is worried about the possibility of a recession as the Federal Reserve raises interest rates to cycle the highest inflation in decades. That could pose a problem for companies in turmoil, even if their corporate debt appears to be generating high yields at attractive prices. “This is not the time in the bottom fishing cycle,” says Koesterich. According to LPL’s Gillum, investors who are hungry for higher yields than Treasury but don’t want to take on corporate debt have a number of options. That includes choosing index funds or exchange-traded funds that are focused on the corporate credit market. The chart below includes performance as of 2:10 p.m. ET. “For individual investors, most of the time it’s better to have a diversified vehicle,” he said. Gillum also sees core bonds and mortgages as solid investments for those who want some return without taking on too much risk – for example, the current Bloomberg US General Bond Fund. has a yield of 3.73%, up from about 1% a year ago. “You don’t have to take risks to get these increased yields,” he said.