Many investors are rethinking the role of bonds in their portfolio – we’ve previously reported how some investors are turning to gold as an alternative.

Gold is useful because it functions as a hedge against inflation, but it doesn’t offer any passive income, and that income is a major factor why so many portfolios have such a large exposure to bonds.

So what’s an alternative way to maintain passive income within a portfolio?

One solution for investors is to pivot from one kind of fixed-income—bonds—to another kind of fixed-income, such as a credit fund.

Fixed-income serves an essential function within an investment portfolio, and just because bonds are weak doesn’t mean that investors should throw the baby out with the bath water.

Fixed-income ensures that investors have a liquidity cushion in the event of volatility that affects their other investments. And as investors approach or enter into retirement, fixed-income is vital for providing the liquidity to cover the day-to-day expenses.

If you’re an investor who is rethinking your asset allocation to move away from bonds, seriously consider whether an alternative class of fixed-income, such as a credit fund, can fill that gap.