Rising yields were a major theme last year as bonds entered a bear market. Yields on 10-year Treasury bonds rose as high as 5% in October – a 16-year high – but have since fallen to just above the 4% level. Yields and prices move in opposite directions. But in recent months, many have called for investors to return to bonds as prices are expected to recover soon. The decline in yields could lead investors to wonder which corners of the fixed income market still offer higher yields, up to 6%. Brandon Huang, head of fixed income at LGT Private Banking Asia, says 2024 will be the year bonds provide a “reasonable risk-adjusted return in a normalized yield environment.” “Inflation has fallen in the US, which will allow the Fed to reduce its policy rate midway this year. We conclude that investment grade bonds are compelling after looking at the historical behavior of several asset classes regarding rate cuts. rates,” he said. he told CNBC Pro. He urged investors to “lock in returns” right now. “The returns available now after the price revision in 2022 will probably not last,” he said. Huang says if 10-year Treasury yields fall to 3.75%, investment grade bonds could yield 6% or more over the next 12 months: 5% from coupon income and the rest from price appreciation as rates fall. He prefers bonds from developed markets – particularly the United States – to bonds from emerging markets, with longer tenors exceeding seven years. From a sector perspective, he likes financials, particularly maturing Tier 2 subordinated bonds from Australia which could be in line for a credit rating upgrade. Tier 2 subordinated bonds are repaid after the senior debt is paid off in bankruptcy. Investors can also get yields above 6% in non-investment-grade or emerging market bonds, but Huang “urges caution.” “Investors are probably not sufficiently compensated for the incremental risk they take relative to investment grade bonds,” he said. “If we were to allocate to non-investment grade bonds, we would prefer issuers with improving balance sheets or issuers with commercial operations that are expected to perform well,” she added. Remi Olu-Pitan, head of multi-asset growth and income at Schroders, told CNBC Pro that mortgage-backed securities can yield about 5.5% now and “at most 6%,” citing Fannie Mae and Freddie Mac in the United States as examples of such agencies. Such mortgage-backed securities are agency-issued debt obligations whose cash flows are tied to interest and payments on a pool of mortgage loans. Agency MBS have low credit risk because they are backed by the US government. If investors are willing to take on more risk, Olu-Pitan says, non-agency MBS now yield about 7% to 7.8%. However, they are not guaranteed by the US government. Here are some exchange-traded funds with mortgage-backed securities to consider. Emerging market debt can also offer high yields thanks to very high real rates in many of these economies, says Olu-Pitan, with Latin American debt “easily” offering above 7%. In investment grade bonds, investors can exceed 6% in U.S. financials, she added. — CNBC’s Michael Bloom contributed to this report.