Fixed income investments, such as bonds, have traditionally been popular among investors seeking stable returns and predictable income. However, the current low yield environment has made it difficult for investors to generate satisfactory returns from these investments. In this article, we'll explore some strategies that investors can use to generate returns from fixed income in a low yield environment.

1. Consider High Yield Bonds

High yield bonds, also known as junk bonds, are debt securities issued by companies with lower credit ratings. Due to their higher default risk, these bonds typically offer higher yields than investment-grade bonds. While investing in high yield bonds carries a higher level of risk than investing in investment-grade bonds, it can be a viable strategy for investors looking to generate higher returns from fixed income.

2. Diversify Your Fixed Income Portfolio

Diversification is a fundamental principle of investing. By spreading your investments across a range of fixed income securities, you can reduce your exposure to any one particular issuer or asset class. Diversification can help to mitigate risk and potentially increase returns. You may consider investing in different types of fixed income securities, such as government bonds, corporate bonds, municipal bonds, or international bonds.

3. Consider Active Management

While passive fixed income investments, such as bond index funds, can provide low-cost exposure to a broad range of fixed income securities, they may not be the best choice in a low yield environment. Active management can help investors to identify opportunities to generate alpha, or excess returns, by actively selecting and managing individual securities. Active management can be particularly beneficial in a low yield environment, as managers can seek out higher-yielding securities that may not be included in passive fixed income investments.

4. Invest in Floating Rate Bonds

Floating rate bonds are fixed income securities that have a variable interest rate, which is typically tied to a benchmark interest rate, such as the LIBOR. The interest rate on floating rate bonds is adjusted periodically, usually every six months, to reflect changes in the benchmark rate. Floating rate bonds can be a useful investment in a low yield environment because they typically offer higher yields than fixed rate bonds of similar quality, and their interest payments can increase as interest rates rise.

5. Consider Emerging Market Debt

Emerging market debt, or bonds issued by governments or corporations in developing countries, can offer higher yields than fixed income securities issued by developed countries. While investing in emerging market debt carries a higher level of risk than investing in developed market debt, it can be a viable strategy for investors looking to generate higher returns from fixed income.

In conclusion, a low yield environment can present challenges for investors seeking to generate returns from fixed income. However, by considering high yield bonds, diversifying your fixed income portfolio, considering active management, investing in floating rate bonds, and considering emerging market debt, investors can potentially generate higher returns from fixed income investments. As always, it's important to do your own research and consult with a financial advisor before making any investment decisions.