With money market yields at well under one-half of 1%, it's less compelling for investors to sit on the sidelines to avoid interest rate risk. One option is to move some money into shorter-term corporate bond ETFs, which were recently yielding about 2.5%.

Another strategy is to lighten up on ETFs that invest only in Treasurys and other government securities, which are very sensitive to interest rate fluctuations, and shift into funds with less interest rate sensitivity, such as those focusing on investment-grade corporate or high-yield bonds. Some money managers also recommend spreading bets with a "barbell strategy"-combining ETFs that invest in short-term fixed-income securities at one end with those that focus on longer-term investment grade or high-yield bonds at the other.

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