Let's take a look at last year's infamous but now all-but-forgotten interest rate spike in May and June. When former Federal Reserve Chairman Ben Bernanke gave the market its first whiff of tapering, the reaction was swift and startling-the 10-yr jumped from 1.90% to 2.50% in five weeks:

AMJ Chart
data by YCharts

In much the same vain, as the 10-year rate has come off the 3% level since New Year's Eve, REITs, MLPs, Utilities and Emerging Markets (as represented by Vanguard FTSE Emerging Markets ETF (VWO)) have all found much steadier footing. We outlined some additional bullish points for the emerging markets a couple weeks ago here.

AMJ Chart
data by YCharts

It's not always easy to stay diversified -- to maintain allocations to these interest-rate-sensitive assets seemed a fool's errand last year. As a result, many investors have missed out on some very nice performance over the past four months.

So how should we be positioned going forward? In my view, what's worked so far this year is likely to keep working. The chart above demonstrates the 10-year Treasury being range bound and its current yield sitting at the top end of a current range.

Should it fall further from here we are likely to see continued strength in the bond surrogates (AMJ, IDU, VNQ). For taxable accounts, you may wish to consider individual MLPs for the tax advantage -- we like AmeriGas Partners (APU), Energy Transfer Partners (ETP), TransMontaigne Partners (TLP) and Williams Partners (WPZ) right now.

Now, the arguments for higher rates make a lot of sense and shouldn't be dismissed by any stretch. But I'm not ready to bet with the herd just yet.

At the time of publication the author is long AMJ, VNQ, VWO, APU, ETP, TLP and WPZ..

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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