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<v ->As we expect yields to rise,</v>

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how should I be positioning my portfolio

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with my current risk tolerance?

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<v ->That's a great question</v>

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because most people think that higher interest rates

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are actually good for bonds,

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but they're not good for existing bonds.

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If new bonds have higher interest rates,

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existing bonds aren't worth as much.

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And so, people in what they think

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is a conservative bond fund could be down three to 4%,

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which is not something the average investor really wants.

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So, we actually like a bond called the floating rate bond

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that has a price of a hundred, like a fixed-rate bond.

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But instead of paying you a fixed coupon of say 2%

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or $2 per hundred, it goes up and down with interest rates.

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And because we think the course of interest rates

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is generally higher we think a floating rate bond

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is a good place to be.

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And we have a lot of floating-rate bonds in our portfolio.

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<v ->For more on interest rates</v>

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and our thoughts on the markets,

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please check out cansofunds.com

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and read our latest edition of the Market Observer.