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I think that is a fund that has zero-coupon bonds. You get taxed on interest you don't actually receive. When the bonds mature you get 100c on the dollar; it is worth less now and because of the interest rate hikes in the past year you have a loss.
I'd take the loss at short-term rates. Since you bought in August this year, it is all short term. Sell, avoid the distribution and it is all short-term. If you take the distribution it is long or short term according to how long the FUND has held the bonds; if you sell, it is long or short term according to how long YOU have held the shares. There is never an advantage in allowing a loss to become long term. At maturity, the shares will be worth 100 cents on the dollar. The loss this year has to do with what the Fed has been doing with interest rates. To buy again before the following Jan 31 Fed meeting is reasonable. I'd be looking to buy on a day when the 10-year treasury is paying over 4.5%, but after 31 days of selling.
Best wishes, Chris
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