Managing Interest Rate Risk in a Fixed Income Portfolio

As the portfolio manager of a fixed income fund with a duration of 7 years, you are tasked with managing interest rate risk in a rising interest rate environment. Recent economic indicators suggest that the Federal Reserve is likely to increase rates in the upcoming quarters. In your analysis, you must evaluate and devise a strategy to mitigate the impact of rising rates on the portfolio's value.

Your response should include a discussion of duration and convexity, potential changes to the portfolio structure, and alternative strategies such as the use of derivatives or the adjustment of bond maturities. Additionally, incorporate analysis of how different interest rate scenarios affect the portfolio and justify your recommendations based on theoretical and practical considerations.