Edit ModuleShow Tags  A winning fixed-income formula  The
Federal Reserve continues to make headlines over the question of
when it will begin to “taper” the current quantitative easing
(QE3).  Many investment pundits are suggesting that investors
should forego any fixed income (bond) investments. Because the
key to successful long-term investing is a diversified
portfolio, getting totally out of fixed income investments does
not seem prudent.  By being sensitive to current market
conditions, it is possible to structure a profitable fixed-
income portfolio.  One of the most significant risks to bonds
and bond funds is rising interest rates.  Long-term bond funds
have performed exceptionally well over the past 20 years as
interest rates were falling.  The same factor (duration) that
allows longer term bond funds to outperform shorter term bond
funds when interest rates fall makes longer term bond funds more
vulnerable to losses when interest rates rise.    Every bond and
bond fund has an effective duration. Dura