Let me know if you have any better ideas.

Not necessarily better, just other ideas.

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Fund/ETF investing in residential mortgage backed securities (RMBS), especially non-agency. You can get a nice premium over treasuries of comparable duration, without any added risk.

Why no added risk? Because a homeowner would have to be dumber than a rock to default in today's environment. Homes have gone up so much in value that most mortgates are above water. Makes no sense to default. Selling the house, paying off the mortgate and pockting the difference is the better option.

Prepayment risk due to refinancing is also non-existant. With interest rates where they are, you cannot refinance to a lower rate.

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Instead of picking TIPS or RMBS or some other niche, just take the stance that interest rates are at a decades long high and pick a "Core Plus" fund from a trusted bond shop. Let the bond manager take care of picking and maintaining optimal asset allocation typically from below asset classes.

Agency CMBS
Agency RMBS
Asset-Backed Securities
Bank Loans
Collateralized Loan Obligations
Emerging Markets Local Currency
Emerging Markets USD
Government (nominal & TIPS)
High Yield Corporates
Investment Grade Corporates
Non-Agency CMBS
Non-Agency RMBS
Non-U.S. Developed Local Currency

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Look for a closed end bond fund trading at signficant discount to NAV. You will lock in the yield plus the discount. Just make sure when you calculate yield are only using the income portion of the distribution and excluding an Return of Capital (ROC) if any. Sites like https://www.cefconnect.com/ can tell you exactly how the distribution is being split between income and ROC for any closed end bond fund.

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