What does hedging interest rate risk mean?

From Morningstar (AGZD):
"The investment strategy as stated in the fund's prospectus is as follows: The investment seeks to track the price and yield performance, before fees and expenses, of the Bloomberg Rate Hedged U.S. Aggregate Bond Index, and Zero Duration (the "index"). The index is designed to provide long exposure to the Bloomberg U.S. Aggregate Bond Index while seeking to manage interest rate risk through the use of short positions in U.S. Treasury securities".
Albeit, the bonds the fund is long on tend to be high grade corporates while it shorts treasuries (the fly in the ointment perhaps). Morningstar rates credit quality AA. Nothing lower than BBB in the portfolio, except in negligible amounts.
What does it mean for you or me? Means you won't have to worry much about it getting clocked badly if longer term rates spike higher as they did in 2022. It's never had a losing year in its 10+ years of existence.
Price's TRBUX has done slightly better over 5 & 10 years, but with 25+% of its holdings rated either BB or not rated at all..

Thanks for fact-checking me @Derf. My memory was flawed. Checking the records, I bought a slug of DKNG very early in 2022 (at around $11-$12) and sold it all in February same year. The $72 share price I cited occurred long before I ever owned it. Looks like it never got above $42 in later years. Sitting around $26 today. (I'm deleting the prior incorrect comment.)
I haven't wagered on any game since before Christmas. Good luck if you're wagering that $30!

The February issue of Mutual Fund Observer is live. With so little to keep your attention this weekend, we thought we’d launch on a Friday evening!
I’m sometimes struck by our selective recall. Shakespeare’s Richard III opens with “Now is the winter of our discontent” (things suck, I nod), which everyone recalls. Somehow, the optimistic second line “made glorious summer by this sun of York” (better times are coming) gets missed.
We’re keeping that hopeful thought for us all.
Highlights of this month’s Observer include a short memorial to Doug Ramsey, CIO of the Leuthold Group, who passed away unexpectedly at the end of January. Individual pieces include:
Our colleague Lynn Bolin shares The One Uncorrelated Portfolio to Rule Them All by Slaying Inflation and Market Corrections, tackles the challenge of building a portfolio that can weather both inflation and market corrections by searching through hundreds of alternative funds for options that zig when others zag. His "Grins and Giggles Portfolio" minimizes correlation between holdings over the past six years, while his "Last Laugh Portfolio" achieves 8.3% annualized returns with a maximum drawdown of just -6.3% over ten years. The secret? Read on!
In Perpetual Motion Income Machine, Lynn pursues the question, can you build an income portfolio that generates steady distributions while beating inflation? Lynn believes you can, targeting 7% minimum returns to cover 4% withdrawals plus 3% capital appreciation. He divides nearly 100 income funds into four groups based on capital appreciation and yield, identifying funds with high risk-adjusted yields and consistent distributions. The key insight: balance funds that fluctuate with interest rate cycles against those tied to stock market cycles to reduce sequence-of-return risk.
Given our ongoing interest in “quality” investing, we offer Quality Worked in 2025, and failed spectacularly, which looks at what “quality” investors did, and didn’t accomplish in 2025, and how to think about them in the years ahead.
Our A Letter to Layla is directed to the young trainer who is trying to coax Chip and me into being fit. (I’m all about dead bugs.) Layla admitted that she would like to learn a bit about mutual fund investment so she can start moving in a healthy financial direction. This is my attempt to think about investing strategies for folks of Layla’s age – or my son Will’s – from the perspective of her work as a trainer.
The Indolent Portfolio, 2025, is the latest installation in my annual portfolio disclosure. It offers suggestions for how to build a low-maintenance portfolio and a three-fund alternative to my admittedly sprawling collections. (PS, the portfolio itself did just fine last year: stable, cash-rich, and up 14%.)
Our colleague The Shadow shares a wealth of industry news and foolishness, as ever, in Briefly Noted.
And, as ever, we share it all in the lovely magazine layout https://www.mutualfundobserver.com/issue/february-2026/ and the inexplicably popular long-scroll version https://www.mutualfundobserver.com/2026/2/.

@rforno- I have no idea re RWMGX or RERGX, but we did very well with WaMu and EUPac Growth many years ago. For many years we primarily used AF in our accumulation phase.
Like other fund companies at the time AF did have a high front load (about 5% if I recall correctly), but that load was stepped so as to decrease as we gradually built our accounts. A nice thing about AF was that they combined the values of our two IRA accounts and the trust account to calculate the load, and we did reach a level where there was no load at all. Also, unlike some other fund companies, the load did not apply to any reinvested dividends.

They indeed are WaMu and EuPAC Growth (which got renamed due to SEC rules last year) - great minds think alike! :) These are in my 403b so no loads are paid, thankfully .... and the AFs I own in one of my taxable account more than qualify me for discounted loads if I ever wanted to buy more of their stuff, too.

There is nothing wrong with cheap int’l index funds. They provided over 30% total return that cost several basis points. We use broad based developed market index funds as the base. For EM, i prefer actively managed funds for their stock and region picking.
Not necessary a recommendation for everyone. i am trying to consolidate my many funds to a dozen or less funds and ETFs.

I tend to agree. And have been consolidating for a few years now.

@rforno- I have no idea re RWMGX or RERGX, but we did very well with WaMu and EUPac Growth many years ago. For many years we primarily used AF in our accumulation phase.
Like other fund companies at the time AF did have a high front load (about 5% if I recall correctly), but that load was stepped so as to decrease as we gradually built our accounts. A nice thing about AF was that they combined the values of our two IRA accounts and the trust account to calculate the load, and we did reach a level where there was no load at all. Also, unlike some other fund companies, the load did not apply to any reinvested dividends.

Thanks @Mark for the working link!
Re "Sell America". It makes a catchy headline. I get it. On a guttural level I might agree. Two investment reasons for doing so might be to (1) diversify currency exposure or (2) spread your equity risk around as different economies peak and fall at different times. If the first reason, make sure your fund doesn't hedge back to the U.S. dollar because that is often the case.
Let's look at it from the perspective of global dominance (from Bing's AI):
The United States dominates the global stock market in terms of market capitalization, accounting for over 50% of the world's total—a figure that has risen to as high as 62% in recent years. As of early 2026, the U.S. market cap stands at approximately $40.3 trillion, far surpassing the next largest markets.
United States:
Market Cap: $40.3 trillion (as of 2022, with estimates suggesting continued growth) Represents ~48.6%–62% of global market capitalization depending on the source and timeframe. Home to 6,062 listed firms, including tech giants like Apple, Nvidia, Microsoft, and Amazon
Top Global Competitors:
China: $11.5 trillion (~12.6% of global market cap)
Japan: $5.4 trillion (~5.0%)
India: $3.6 trillion (~4.2%)
United Kingdom: $3.1 trillion (~2.6%)
Canada: $2.7 trillion (~2.4%)
In table format here's a Wikipedia article.
https://en.wikipedia.org/wiki/List_of_countries_by_stock_market_capitalization
Re valuations. There's an abundance of evidence that the S&P is richly valued. That is not necessarily the case with those companies outside the Magnificent 7 ** who's whose market cap weighs heavily. I don't think you need to look too hard to find value in some U.S. large caps along with mid-caps or small-caps.
My own exposure? I don't really believe Fido's analytic tool. It says I'm only 33% in equities. :) It also says about 1/3 of those are non-U.S. That's probably in the ballpark. But much of that comes from a real assets fund. A lot of natural resource companies reside outside the U.S. All might do well to take that into consideration. They might have more foreign exposure than assumed.
In my individual stock basket (5% of total assets) I've intentionally included 5 foreign stocks for diversification purposes:
U.S. 15
Japan 2
New Zealand 1
Holland 1
Canada 1
** Here's a link to a recent Motley Fool article re the Mag 7's market dominance:
https://www.fool.com/research/magnificent-seven-sp-500/

@FD100 -- pretty sure Howard Marks has a very strong track record as an investor; looking at one or two good or bad years / bad calls is kind of silly for evaluating something like market performance.

From Markets A.M. newsletter by Spencer Jakab.
On this day in 1994, just as investors were pouring billions of dollars into bonds,
the Federal Reserve raised short-term interest rates for the first time in five years, and without warning.
By year end, the Fed had hiked short-term rates by 2.5 percentage points.
Treasury bonds had their worst return since 1967.

Here is what David Snowball said about PMAIX in August of last year:
"What it does: The fund seeks high current monthly income relative to the broad market through a diversified portfolio of income-producing stocks and bonds. It has broad geographic diversification – 23% US equities, 21% international equities, 36% in bonds – and asset class diversification, including catastrophe bonds, master limited partnerships, and real estate. The equity holdings tend to be smaller and more value-oriented than their peers. The portfolio is also actively hedged to reduce volatility, while protecting income.
Why you might be interested: The fund has a 0.5 correlation with the S&P 500 and has returned 11.0% annually over the past five years. It has a 6.9% yield, almost double its peers’. MFO recognizes it as a Great Owl fund, and Morningstar assigns it five stars.
Why you might hesitate: This is an $8.3 billion fund, and lead manager Marco Pirondini recently added the responsibilities of Chief Investment Officer for the firm to his portfolio. Those responsibilities, plus some turnover in the management team, give Morningstar pause."

My Schwab account came with Investor Checking when I opened it more than 25 years ago. One nice feature is that I can write a check or do an ACH transfer from the IC account and any "overdraft" is automatically debited from my brokerage cash position. These days, in fact, I pay estimated income and property taxes and almost all large purchases via ACH. The debit card, as previously noted, fully refunds ATM fees which can be extremely elevated when traveling outside the country. I often transfer funds to a joint BOA checking account that we use for routine purchases. In fact, very few merchants get checks from us any more.

India has been very active on trade deals. These used to take years, but now are coming through quickly.
Trade deals done in 2025: United Kingdom (CETA), Oman (CEPA), New Zealand (FTA), the EFTA bloc (Switzerland, Norway, Iceland, Liechtenstein; TEPA signed in 2024, effective in 2025)
Trade deals signed/pending: Chile, EU ("mother of all deals", 01/27/26*), Eurasian Economic Union (EAEU - Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan), Kyrgyzstan, Mercosur block (South America - Argentina, Bolivia, Brazil, Paraguay, Uruguay, etc), Mexico, US (2/2/26*)
The new US Ambassador GOR in India has delivered within days on a mutually beneficial & sensible India-US trade deal with US tariffs reduced to 18% as trade negotiations continue (basic 25% -->18%, penalty 25%-->0%).
*Still need ratification.

@JD_co: I haven't paid much attention to Bridgeway in recent years, but in checking the M* Parent tab on BRGOX I see that the firm has been hemorrhaging assets for the past few years.
AQR has some impressive alternative funds. I looked at QLEIX but passed on it because TF at Schwab makes incremental buying too dear. I much prefer the ETF. As for ORR, it will be hard to predict what the tax bill might be at year-end.

We have been swapping US stocks for oversea stocks to diversify away from Mag 7 and AI stocks. My exposure to tech is through S&P 500 index for a number of years now. PRWCX made a sizable and late change toward Mag 7 stocks. Between the two, i chose the cheaper fund to cover tech sector. In addition, i am consolidating funds as i approach retirement. Goal is to have less a a dozen funds in a year from now.
On the bond end, we hope OSTIX will improve this year even though it trailed junk last year. David Sherman’s new fund, NRDCX excelled last year (much better than i anticipated). Pairing it with DODLX, my oversea bond funds are doing very well comparing to BNDX as the benchmark.

To this day I miss living in CA having moved years ago. There's just a vibe there that I don't get in other areas including my home state. If only my income met my wanderlust.

I uploaded the S&P Global spreadsheet maintained by Howard Silverblatt. I have done this regularly for the past 15 or 20 years. He left a note:
"Today is my last day at S&P, May 17, 1977 - January 31, 2026 - It has been a pleasure to work with so many wonderful, talented, and caring people over the years, both inside and outside of S&P"
Here is a tribute to Mr. Silverblatt:
https://www.spglobal.com/spdji/en/commentary/article/daily-index-insights-tribute-to-howard-silverblatt/
Here is a useful dashboard which I had not seen before:
https://www.spglobal.com/spdji/en/documents/performance-reports/dashboard-daily-global-markets.pdf
I appreciate the use of his educational tools. Best Wishes!

The pullback continues for next Monday. Here is the future market :
1. All global stock indexes are red.
2. Spot price of gold is falling below $5,000 an ounce
2. Oil is falling back to $61 per barrel
3. US dollar is rising to 97 against major currencies
4. 10 years treasury price is rising and the yield fell (inverse relationship)
https://finviz.com/futures.ashx

Thanks @Observant1 / Those conform to common usage. I'm saying there's nothing "common" about the precious metals. They have a history of erratic performance.
FWIW: Here's an interactive chart of gold's performance from 1978-2025. The spikes higher in price stand out. But if you add up the declines / duration it appears that 30% or greater declines over just a few years are quite common.
https://curvo.eu/backtest/en/market-index/gold-bullion?currency=eur
(Scroll down to the green & red bar chart.)
From 1981 thru 1984 gold fell over 50%.
From 1988-1992 gold fell about 35%.
From 1994-2000 gold fell about 30%.
From 2013 thru 2015 gold fell about 40%.
The big years? In '1979 gold gained about 130% (followed by nearly a decade of losses)
Nothing later approached the '79 year performance. However, the run up over the past 3 or 4 years appears greater in aggrigate than '79. Looks like over the next 8 years (after '79) it gave back quite a bit.

ETF SPC (09/2021- ) has changed name, ticker & objectives as CUSD (01/2026- ).
SPC invested in the niche area of pre-merger SPACs. A new SPAC has to find a viable business within 2 years or return the money to investors. Pre-merger SPC counted on money being returned. Now that SPAC business has disappeared - although there is some new activity - it was just a matter of time that SPC was liquidated or changed.

Let's keep this in perspective... so far I'm doing OK with this, but I don't consider this so much as an "investment", but rather simply gambling money. Rono's been actually investing in precious metals for years, and knows his way around the block.