Registered: Jun 2011
07-07-12 01:25 AM
there really isn't enough money in bonds right now to be both long and short. If you take the small amount of interest you are receiving and then use that to hedge aganst your very own long position, you will end up losing the little you are making.
Keep in mind, if rates go up, yes, you will take a hit on principle, but as those bonds in the fund mature, they will then be reinvested in the new bonds with higher rates.
otherwise,as previously stated, the only way to do it is to buy the bonds outright and hold them to maturity. Typically you would ladder them so every year some mature. But that is all the etf is doing anyway so it comes out about the same.
But you and me both, and a lot of others have been doing pretty well in bonds over the last decade, but the days of capital appreciation are over. If you are living off the income there is in my opinion no need for a hedge or a change. But if it is money in the safe, the best idea I can think of is to lighten up a bit.
But where to go? That is the question. There's no such thing as cash anymore, so you gotta go somewhere.