Times are tough out there, and that goes double for investors looking to profit in these uncertain times. This three-part series will shed a light on some of the best investments for the remainder of this challenging year. Part 1 looked at some of the best overseas opportunities and Part 2 focused on some options closer to home. The final installment of this series will examine some of the best alternative investments for the current environment.

Investment No. 8: Vanguard REIT Index ETF (NYSE: VNQ)
Diversification is just about the only free lunch you can expect in investing, so it pays to branch out from the typical stock, bond, and cash allocations. One area where you can add diversification while also picking up some extra yield is real estate. While home prices have languished and are only now showing signs of rebounding, commercial real estate has actually had a pretty nice showing in recent years. While real estate should never have a large representation in anyone's portfolio, aggressive types could safely use a 10%-15% allocation. More conservative types should stick to 5% or less of total assets.

The Vanguard REIT Index tracks the performance of the MSCI US REIT Index, so coverage here is broad and includes more than 100 real estate investment trusts. As is the case with practically all Vanguard funds, low fees are a feature here -- you'll only pay 0.10% to get in the front door. Over the most recent five-year period, the fund has racked up a 2% annualized return, putting it ahead of 88% of all real estate funds. Don't expect a smooth ride here, as year-to-year returns are quite volatile. But long-term results should be very pleasing for shareholders.

Investment No. 9: PowerShares DB Commodity Index Tracking ETF (NYSE: DBC)
Another tool for adding an additional layer of diversification to your portfolio is using commodities. This alternative asset class has gotten a lot of attention in recent years as stocks have struggled and bond yields have sunk to historic lows. This exchange-traded fund tracks the performance of a commodity index that includes oil, natural gas, gold, silver, copper, corn, wheat, and soybeans, among others. Over the past five-year period, this fund ranks in the top 1% of all broad commodity funds.

As with most commodity-related funds, volatility is a way of life here. If you can't stomach the ups and downs of the commodity market cycle, you might want to skip this fund. And even more aggressive investors should keep expectations in check and allocations on the smaller side. At 0.85%, this fund isn't cheap as far as ETFs go, but it's reasonable for this asset class. Commodities won't be immune from a global slowdown and will be vulnerable if another worldwide recession does emerge. But given the recent pullback in many corners of the commodity sector, prices are more attractive now than they have been in recent history. And given the generally growing demand from rapidly expanding emerging markets, commodities are an excellent choice to help supplement returns from equities.

Investment No. 10: iShares S&P U.S. Preferred Stock Index ETF (NYSE: PFF)
If you're among the many investors who are desperate for more yield, there are some additional options beyond the usual suspects of dividend-paying blue-chip stocks or high-yield bonds. Preferred stocks are a type of equity security that has characteristics of both stocks and bonds. Preferred stockholders have a claim on the company's assets that is senior to common shareholders', but subordinate to bondholders'. The nice thing about preferred stock is that these shares generally pay a healthy dividend that has priority over dividends paid to common stockholders.

This iShares ETF invests in more than 250 preferred stocks exclusively in the financial sector. While this sector obviously has a great deal of sensitivity to economic conditions, preferred stocks should still be a relatively safe source of yield even if another recession materializes, thanks to their hybrid character. Over the past five years, this fund has returned an annualized 2.9%, compared to a 0.3% loss for the S&P 500 Index. As with all alternative investments, keep allocations to a fund like this small; these investments are meant to complement the rest of your portfolio, not serve as the main attraction.

No one knows exactly what's next for the global economy, but it's almost a given that we're going to have to tough out some more storms before we hit more tranquil waters. Sitting on the sidelines isn't the answer for the second half of 2012. Rather, investors should invest carefully in select corners of the market that will provide the best combination of return and relative safety.

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