IF THE FED DROPS, THE ETF COULD GO UP

If the Fed reduces interest rates, Vanguard Extended Duration Treasury Index Fund (EDV) may rise significantly. The effect of each change in interest rates has been magnified by the 24-year period of the EDV, which is expected to increase by about 24 per cent for each reduction of 100 basis points. Goldman Sachs expects that by 2026 the Federal Reserve ' s base interest rate will be reduced to 3 to 3.25 per cent. However, continued inflation may prevent a parallel decline in long-term rates of return with short-term interest rates. Investors wishing to obtain a simple public debt exposure without having to withstand EDV stock market fluctuations suggested that BND or short-term ladder investments be considered as a core hold。