Retail investors are pouring into debt markets, hoping to snap up some of the highest bond yields in more than a decade.

As the Federal Reserve pushes interest rates higher, bonds are emerging as a meaningful alternative to equities for everyday traders with an appetite for risk. The number of trades tripled to as many as 3,000 per day on Interactive Brokers Group Inc.’s retail-focused bond platform in the third quarter, compared to the same period a year earlier.

Individual retail investors are relatively small players in the massive US bond markets dominated by large institutional buyers. But the same factors drawing in the retail crowd now are also likely to pull in other investors -- including pension funds and insurance companies focused on locking in interest income over the long term.

“There continues to be more and more interest,” said Steve Sanders, executive vice president of marketing and product development at Interactive Brokers. “Before, when interest rates were low, there was not much there. Now I think people are saying with interest rates where they’re at, this should be part of our portfolio.”

Two of the biggest high-yield credit exchange-traded funds have also been attracting investors, who last week poured into the iShares iBoxx High Yield Corporate Bond ETF (ticker HYG) and SPDR Bloomberg High Yield Bond ETF (JNK) at a historic rate.

The Fed’s aggressive monetary tightening has sent the yield on 10-year Treasury bonds to hover around 4% after touching its highest since 2007, while corporate bonds pay a healthy interest premium on top of that. The average yield on a Bloomberg index of top-rated company bonds sits at 5.6%, just off the highest in more than 13 years.

That’s tempting for retail traders, especially those who already bought I bonds, the government’s ultra-safe, inflation-protected savings bonds that crashed the TreasuryDirect website with their popularity last month.

Of course, lofty yields in riskier credit markets come with the potential for losses. US investment-grade corporate bonds have lost around 18% this year on a total return basis as Fed officials fought inflation with rate hikes. While high-grade bond issuers are highly unlikely to default and cause losses for investors holding until maturity, those who want to sell the debt before then risk losses.

While US credit markets rallied on the possibility that signs of cooling US inflation could allow the Fed to take a less aggressive stance, policy makers have laid out plans for rates to move higher than earlier projected, albeit at a potentially slower pace.

“Given the pace of recent Fed rate hikes, we certainly have seen increased interest from our self-directed investors,” said Richard Carter, vice president of fixed income at Fidelity Investments.

This article was provided by Bloomberg News.