Offset the AGG

The Benefits of True Alternative Income

Over the past decade, traditional fixed-income investors have navigated an increasingly difficult environment. Following the Global Financial Crisis, a prolonged period of near-zero interest rates left the U.S. bond market offering historically low yields—often below the rate of inflation. Investors were forced to accept diminished real returns or take on additional credit and duration risk in search of income. This dynamic persisted well into the pandemic era, where even modest income generation required accepting
greater volatility or straying from core bond allocations.

A Perfect Storm for Bonds

The challenges intensified dramatically in 2022, when inflation surged to multidecade highs and the Federal Reserve responded with the fastest rate hike cycle in modern history. The result was the worst
calendar year performance ever for the U.S. Aggregate Bond Index, exposing the vulnerability of long-duration assets in a rising rate environment. Compounding the problem, traditional bonds failed to
provide their expected diversification benefits during equity market drawdowns, as both asset classes declined in tandem. For many investors, the last decade has demonstrated the limitations of conventional fixed income and highlighted the need to explore alternative income strategies that can offer higher yield potential, structural downside protection, and reduced sensitivity to interest rate volatility.

Diversification Yields Success

Alternative income assets offer a compelling complement to traditional fixed income by providing diversified sources of return that are often uncorrelated with interest rates and broader markets. Strategies such as litigation finance, royalties, natural resources, equipment leasing, and other asset-backed investments are typically tied to contractual or event-driven cash flows rather than macroeconomic cycles. These assets can offer higher yield potential, structural downside protection, and inflation resilience—making them valuable tools for enhancing income, reducing volatility, and improving portfolio diversification in an environment where traditional bonds may struggle to deliver on their historical role.

Find out our latest opportunities

Related content

Disclosure: Information presented is for educational purposes only, is subject to change from time to time, and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.