Mitigating Interest Rate Risk in Fixed Income Portfolios

A fixed income portfolio manager is assessing the interest rate risk of a diversified bond portfolio consisting of various types of bonds, including government securities, corporate bonds, and municipal bonds. The portfolio has an overall duration of 6 years. In light of recent economic indicators suggesting a forthcoming increase in interest rates due to anticipated inflationary pressures, the manager is considering several strategies to mitigate interest rate risk and maintain stable returns.

The manager is weighing the options to either shorten the duration of the portfolio by selling longer-duration bonds or employing interest rate derivatives for hedging. Which of the following strategies would be the most effective in reducing the interest rate risk of this portfolio?