First of all, I must note, as always, that Google Answers provides
general information, not professional investment advice. If you need
professional investment advice, you should contact a qualified
investment advisor or financial planner.
Yes, there are several ways you as a retail investor can profit from
falling bond prices. These strategies include:
(1) short-selling bonds;
(2) short-selling exchange traded funds (ETFS) that track various bond indexes;
(3) buying mutual funds that are designed to profit from falling bond prices;
(4) buying Treasury Inflation-Protected Securities (TIPS).
If you have high tolerance for risk, think about selling bonds short.
This strategy involves selling borrowed bonds in a margin account in
the hope that their prices will fall. You can also short any of six
exchange traded funds (ETFS), called iShares, that track various bond
indexes. Since long-term bonds are the most volatile, the 7-to-10 year
and 20-plus year Treasury bond ETFs offer the greatest opportunity for
The risk, of course, is that if bonds rally, you'll have to replace
your borrowed securities at a higher price. You also must reimburse
the lender for any interest paid out while you hold the short
position. You may be liable for other fees, too.
Two no-load mutual funds also offer a chance to profit from falling
bond prices: Rydex Juno (RYJUX ) and ProFunds Rising Rates
Opportunity. But unlike short-selling, you don't need a margin
account, and you won't owe lenders any interest."
BusinessWeek: Higher Rates: A Survival Kit
"Betting against bonds"
"How to Short T Bonds"
"Inverse Bond Funds - Betting Bond Prices Go Lower"
Here are the websites of some of the specific investment ideas
mentioned in the articles above:
"Rising Rates Opportunity ProFund "
"Potomac ContraBond Fund (PCBDX)"
"Rydex Juno Fund"
"Treasury Inflation-Protected Securities"
"from falling bond prices"
I hope this helps. Good luck!