Strategies for Managing Interest Rate Risk in Fixed Income Portfolios

As a portfolio manager for a fixed income fund, you are tasked with managing interest rate risk. The portfolio currently holds a diverse range of bonds, including government securities, corporate bonds, and mortgage-backed securities. Given the current economic environment, characterized by rising interest rates, you need to develop a strategy to mitigate interest rate risk while still aiming for your fund's return objectives.

Discuss the various measures you can take to manage this interest rate risk effectively. In your answer, consider the use of duration and convexity, as well as potential portfolio adjustments such as asset allocation changes or the use of derivatives. Additionally, provide reasoning for your proposed strategies and how they align with the overall goals of the fund.