The income conversation has changed. Has your approach?

For years, income investors faced a single, frustrating problem: there wasn’t enough income. Today, that problem is gone, and a harder one has taken its place.

Income is no longer scarce. Treasury bills yield more than many investors thought possible just a few years ago. Bonds are generating meaningful income again. Dividend-paying stocks, floating-rate securities, and other income-producing investments have become increasingly attractive.

Finding income is no longer the primary challenge.

Building a portfolio that can generate income, manage risk, keep pace with inflation, and still grow over time is.

For advisors, this shift has implications beyond portfolio construction.

Many clients continue to hold significant assets in CDs, bond ladders, cash positions, annuities, and other income-oriented investments outside their managed portfolios. As the income landscape evolves, many advisors are discovering that some of their largest growth opportunities may already exist within relationships they have today.

Why income looks different today

The investment landscape has changed dramatically over the past several years.

For much of the decade following the Global Financial Crisis, income investors were forced to choose between accepting very low yields or taking additional risk in pursuit of income.

Today, that’s no longer the case. Investors can earn meaningful income from a much broader range of investments than they could just a few years ago.

Income is no longer scarce

Yields across many income-producing asset classes are substantially higher today than they were just a few years ago.

Source: Morningstar Direct. All figures as of December 31, 2025, unless otherwise stated.
T-Bill ETF = SPDR® Bloomberg 1-3 Month T-Bill ETF (BIL); Short-Term Treasury ETF = iShares Short Treasury Bond ETF (SHV); U.S. Aggregate Bonds ETF = iShares Core U.S. Aggregate Bond ETF (AGG); Long-Term Treas. ETF = iShares 20+ Year Treasury Bond ETF (TLT); High Yield ETF = iShares iBoxx $ High Yield Corp Bd ETF (HYG); Bank Loan ETF = SPDR Blackstone Senior Loan ETF (SRLN) and Covered Calls = JEPI, Frontier Est. for Yield.

That’s a significant improvement from where investors found themselves just a few years ago. But it doesn’t necessarily make income investing easier. If anything, the decisions have become more nuanced.

Higher yields create more opportunities. In today’s environment, making the right choice requires understanding more than just where yields happen to be today.

More yield doesn’t mean less risk

One of the biggest misconceptions in today’s market is that higher yields have somehow made income investing simple again. They haven’t.

Yes, investors can earn more income than they could a few years ago. But they’re also navigating an environment shaped by inflation concerns, massive government borrowing, shifting Federal Reserve policy, and uncertain interest-rate expectations.

In fact, one of the biggest stories in bond markets over the past year has been the return of the so-called bond vigilantes(investors who push yields higher when they believe fiscal policy, inflation, or government debt levels deserve higher compensation).

We recently explored this dynamic in Bond Vigilantes: When the Market Takes Monetary Policy Into It’s Own Hands. The key takeaway is that today’s income environment is becoming increasingly shaped by forces beyond the Federal Reserve.

The takeaway for investors is straightforward. Higher yields are great, but they don’t eliminate the need for thoughtful portfolio construction. A portfolio without diversified income sources may become increasingly sensitive to changes in interest rates, inflation expectations, or shifts in market sentiment.

While chasing yield may be tempting, it often erodes the diversification needed to weather uncertainty.

The question advisors should be asking

When yields were near zero, most conversations centered around one question: “Where can I find income?”

Today, a different question matters more: “How should I build a portfolio around it?”

This distinction matters because generating income and building wealth often require different approaches.

A portfolio can produce an attractive yield while exposing investors to risks they may not fully appreciate. Likewise, a portfolio focused exclusively on growth may fail to generate the cash flow investors need.

The challenge isn’t maximizing income. The challenge is balancing income, growth, inflation protection, and risk management simultaneously.

That’s why we believe investors should focus on total return rather than yield alone.

TOTAL RETURN = INCOME + CAPITAL APPRECIATION

Successful income investing requires balancing both income generation and capital appreciation. Focusing exclusively on either component can create unintended tradeoffs.

Too often, investors evaluate income strategies by asking: “What’s the yield?”

The better question may be: “What am I giving up to get it?”

Income investing is bigger than bonds

For decades, many investors conflated income investing with bond investing. Today, we think that approach is too narrow. Bonds are one of many pieces used to build a diversified income portfolio.

Investors now have access to income opportunities across multiple asset classes, including:

• Investment-grade bonds
• High-yield bonds
• Floating-rate securities
• Dividend-paying stocks
• International equities
• Real assets
• REITs
• Multi-asset income strategies
• Option-based income strategies
• Alternative investments

MODERN INCOME PORTFOLIOS DRAW FROM MULTIPLE SOURCES

Each source behaves differently under changing market conditions. Some may benefit from rising rates while others may perform better when rates fall. Some provide inflation sensitivity and others offer participation in economic growth.

The result is a more diversified income stream that is less dependent on any single market outcome.

The question is no longer: “Which bond should I own?”

The question is: “Which combination of income sources gives me the best balance of income, growth potential, and risk management?”

Why portfolio construction matters

The challenge facing investors isn’t predicting the future, but building a portfolio ready to weather the storm.

Inflation could remain elevated. Interest rates could move lower. Economic growth could slow. Market volatility could increase.

No one knows exactly how these variables will evolve. That’s why we believe income portfolios should not be built around a single forecast. They should be built to navigate a range of potential outcomes. And that’s where portfolio construction becomes increasingly important.

How Frontier approaches income investing

At Frontier, we believe income portfolios should be built around multiple drivers of return rather than a single source of yield.

That’s the thinking behind our Conservative Income Strategy.

FRONTIER CONSERVATIVE INCOME STRATEGY

Source: Frontier, Morningstar Direct. All figures as of April 24, 2026, unless otherwise stated.
The “Current Yield” is either an annualized number of the underlying fund’s most recent distributions, trailing-twelve-month yield, or previous 5 years depending on the volatility of the fund distributions. The current yield of individual portfolios may vary. Different share classes may have different current yields. The holdings of model strategies may vary from the strategies managed by Frontier, as such current yields may also vary.

The strategy combines:

• Fixed income as the primary income foundation
• Equity income exposure to support long-term growth potential
• Global diversification
• Multiple sources of yield and return

The objective isn’t simply to maximize income.

It’s to seek attractive income while maintaining a disciplined focus on total return and downside risk management.

An opportunity hiding in plain sight

Many investors still hold significant assets in CDs, bond ladders, cash positions, annuities, and legacy income portfolios outside their managed relationships.

As advisors revisit income planning conversations with clients, they frequently uncover opportunities to better align the aforementioned assets with a client’s broader goals and investment strategy. This may look like a broadly diversified, actively managed income portfolio.

Sometimes those conversations uncover held-away assets. Sometimes they uncover planning opportunities. Often, they strengthen the client relationship itself.

The new income conversation

For years, the income conversation was largely about finding yield.

Today, it’s about something different.

It’s about helping clients navigate a broader set of opportunities and risks. It’s about balancing income generation with growth potential. Managing uncertainty without becoming overly concentrated. And building portfolios designed to adapt as markets change.

The good news is that investors have more income opportunities available today than they have had in years.

The challenge is knowing how to put those opportunities together.

That’s the new income conversation.

And it’s one we’re always happy to be a part of.