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5 Funds to Buy for Rising Interest Rates

Protect yourself through a number of fixed-income strategies

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Rydex Inverse Government Long Bond Strategy

Guggenheim185One of the purest forms of protecting your portfolio from the ravages of interest-rate risk is to add a fund that shorts Treasury bonds.

My favorite fund in this arena is the Rydex Inverse Government Long Bond Strategy (RYJUX). This mutual fund seeks to provide investment returns that inversely correlate, before fees and expenses, to the daily price movement of the current Long Treasury Bond.

Put simply, when long-term treasury bonds fall by 1%, this fund will rise by 1%.

One of the benefits of owning RYJUX is that it allows you to profit from rising rates without having to use excessive leverage or shorting strategies. You can use this type of fund to hedge your existing long bond positions, but I would only recommend doing so as a short-term trading opportunity. Whenever you are shorting the market, you want to be sure you don’t get caught on the wrong side of a swift reversal.

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