FolioBeyond Alternative Income and Interest Rate Hedge ETF

RISR

Market cap $252M

Sticky inflation and rising rate fears are putting pressure on markets. These ETFs may help investors navigate a higher-rate environment.

5-Star Morningstar-Rated Interest Rate Hedge ETF Reaches Significant Institutional Milestone RISR has a 5-star Overall Morningstar rating and is ranked #6 among 191 funds in Morningstar's Nontraditional Bond Funds category over a 3-year period ending on 4/30/26. The rating and ranking are based on Morningstar's methodology of comparing risk-adjusted returns.

Federal Reserve hikes are increasingly likely, with inflation increasing and unemployment stable. Lots of investments and ETFs should outperform during a period of rising rates. I'll be giving a quick rundown of four such ETFs in this article. Funds vary in risk, from cash ETFs to riskier choices, with the possibility of outstanding gains.

There was a sharp rise in Treasury yields last week, with the 30-year Treasury yield climbing above 5.1% on May 15, 2026. Investor concerns intensified after a series of economic reports suggested inflationary pressures were picking up again, partly due to elevated oil prices linked to Middle East tensions.

The FolioBeyond Alternative Income and Interest Rate Hedge ETF delivers a 6% yield and offers protection against inflation via MBS IOs. RISR surged in rising rates, outperforming both bond and equity benchmarks since inception. The ETF is largely insensitive to non-rate economic factors, distinguishing it as an all-weather inflation hedge, but remains exposed to MBS market risk.

FolioBeyond Alternative Income and Interest Rate Hedge ETF offers unique negative duration exposure via AAA MBS IO strips, targeting rate-sensitive investors. RISR's price declines as rates fall, but its negative duration makes it an effective hedge for portfolios with positive duration fixed income holdings like IEI or IEF. Despite lower rates ahead, RISR remains a 'Hold' due to its hedging utility and high yield, not as a standalone investment in a falling rate environment.

NEW YORK--(BUSINESS WIRE)--The FolioBeyond Alternative Income and Interest Rate Hedge ETF (NYSE Arca: RISR) has crossed the $180 million asset threshold, placing the fund in the top 50% of fixed income ETFs by assets under management. This milestone reinforces RISR's position as a leading actively managed solution for investors seeking both income generation and interest rate risk mitigation. RISR is ranked #6 among 235 funds in Morningstar's Nontraditional Bond Funds category over the 3 years.

RISR invests in interest-only mortgage-backed securities, unique securities with negative duration. This rate sensitivity is the opposite of traditional bonds, which generally see higher prices when rates fall, and vice versa. RISR's negative duration means the fund can be used as an interest rate hedge or as a short-term trade for hawkish investors.

RISR delivered exceptional returns (+77% since 2021) with negative duration, thanks to active management and a favorable rate environment. The fund uses quantitative strategies to navigate interest rate hiking scenarios, with strong exposure to the MBS and a -5/-10 negative duration. The management was able to deliver positive alpha in 2024 and is navigating well within the macro scenario of 2025.

FolioBeyond Alternative Income and Interest Rate Hedge ETF (RISR) has a 5.6% yield from interest-only MBS and an astonishing feat: negative duration. RISR has delivered stellar returns since inception, outperforming the Nasdaq 100 due to the recent rate hike cycle. RISR is still untested in falling rates, so it is best used as a hedge or a trading instrument, not as a standalone long-term holding.