This leads me to believe there may be some arbitrage activities available to me as an individual long-term investor that are not available to hedge funds or professional arbitrageurs (because the volume is too low to make it worth their effort).
In other words, I'm thinking of "timing" moves from individual Treasury Bonds into EDV. For example, suppose I can get EDV at a 0.5% advantage relative to the value of TBonds at the time. Then I should sell some of my individual bonds and immediately buy EDV.
I'm aware EDV isn't a perfect analog for LTTs and is a bit more volatile, however if I keep it at under 20% of my total bond holdings (or 5% of my total portfolio), it should work fine, especially if I can juice returns by 0.5% by playing the spread to my advantage.
Similarly, I could sell when I can get an advantage and immediately buy Long Term Treasuries. Since I have a VG account, EDV is free to transact as are treasuries on the secondary market, and since this is within an IRA, there's no taxable event occurring.
I also mention the distribution because I'm guessing the annual distribution of the fund is a period of time that causes people to react in an illogical sense in order to avoid taxes... which don't affect me as an IRA-brokerage holder. Thus, if everyone is panicking to liquidate to avoid a distribution on an ex-dividend date, it might be a good buying opportunity for me, since I can "eat" the distribution at no cost to myself.
This might be risk-free money and I'm pretty sure Melveyr can write a Google Docs spreadsheet that calculates the relative advantages and arbitrage opportunities in real time
