That makes sense but I am still uncertain whether this fund is one I want to use. I've always thought derivatives are more volatile than stocks, so will a "bond" fund that is really mostly invested in bond
derivatives reduce the volatility of my portfolio? Given a 70% allocation to PTTRX, would it act like a portfolio with 70% bonds, or a portfolio with 70% derivatives??
I want bonds in my 457 account to reduce the volatility of the portfolio as a whole. Will a fund like this have (roughly) the same return, standard deviation and correlation to equities as a bond index fund would? If not, it isn't what I'm looking for, even if it's a very good fund when considered in isolation. Now I am getting anxious because the only other option I have for adding a high proportion of bonds to the 457 is to switch over to Vanguard Target Retirement Income (VTINX). This fund holds Vanguard Total Bond Market Index and Vanguard Inflation Protected Secs (again according to the custodian's Fund Info sheet). I haven't had time yet to look up and see what's in those funds. >sigh<