Financial advisors may find themselves in a tough spot with their fixed-income holdings if interest rates start to rise—a strong possibility once the Federal Reserve completely unwinds its stimulus program.

Reviewing a portfolio’s duration risk is how advisors can start taking precautions, three portfolio managers said Thursday at the 2014 Envestnet Advisor Summit in Chicago.

Portfolios need protection from inflation, which will likely be a factor if interest rates rise, they said. One way to lower duration risk, but provide higher yields, is to start focusing on instruments that are credit-oriented rather than interest-rate sensitive, said Adam Backman, a portfolio specialist at Lord Abbett.

Some of these instruments include U.S. corporate bonds, bank loans and high-yield bonds, preferably with durations that are shorter than the yield they provide, he said. “If the duration is more than twice the yield, that’s just bad bond math,” he said.

Backman said he would stay away from U.S. Treasury-Inflation Protected Securities (TIPS) for those trying to protect against inflation. “These move in lock-step with government bonds,” he said.

In the current market, TIPS have an average duration of 6.72 years and yield next to nothing, he said. In the past, TIPS did well, but that was because yields were falling. “2013 was a major wake-up call for TIPS,” Backman said.

Instead of using TIPS as an inflation hedge, he recommended CPI swaps, which are swaps linked to the consumer price index. He said these instruments are not correlated with Treasuries and have much less volatility than other traditional inflation-fighting tools, such as real-estate investment trusts, commodities and gold.

Thomas Marthaler, a portfolio manager at Neuberger Berman, said the market is currently pricing in expectations that the Fed will raise rates later and rates won’t rise as high. He said the bond market appears to be pricing in a 10-year Treasury yield of about 2 percent, but he said there’s a low probability of that. Instead, he said Neuberger Berman is forecasting a 3 percent, 10-year Treasury yield once interest rates normalize.

But, the portfolio managers said, trying to guess where interest rates will be in the short-term is not a good idea. “If you feel the need to call rates in the near-term, lie down and the feeling will pass,” Backman quipped.

Marthaler also cautioned against getting too defensive with a fixed-income portfolio by staying with very short-term duration as financial advisors can lose out on yield.

Morgan Neff, senior portfolio manager with SMH Capital Advisors, advocated for high-yield investments and admitted a bias to that sector, being a high-yield manager. Still, he said, high-yield offers more credit sensitivity and shorter duration, which makes it attractive. He also noted that the high-yield sector bounced back quickly after sell-offs.

He also cautioned portfolio managers from becoming too aggressive in reaching for yield in the low-interest-rate environment.

Taking a contrarian view, Neff said he questions the conventional wisdom that interest rates are going to rise. “There are existing pressures that could mean yields won’t rise,” he said.

Several of those headwinds include a low labor participation rate, structural unemployment and falling median household income and median family wealth.

“Rising rates are not as foreseeable as one may think,” Neff said.

But he also said he hopes he’s wrong. “I want to see rates rise as a manager. If not, that means we still have the status quo,” he said. “If rates rise, there’s more opportunities for an active manager.”