As you say a more specialised area. I use ETFs sometimes in a few cases, eg where I have a view on something; or want to take a position myself instead of using an expert fund manager; or if I think it's a non-value add area for a fund manager; or can't identify a fund manager that I believe will outperform an index among others.

For bonds if buying a fund I would tend to buy one with a wider remit with reasonable fees where an active fund manager would make these sort of calls. Fixed rate/not, inflation linked, tenor, credit, currencies, etc etc

As for the questions

a) I don't see a significant rise in inflation in the next 2-3 years. Some time after that maybe, but we'll be in low growth low rates for the next couple of years at least. Next 2 years. No. 3rd year posibble but unlikely. More likely 3-5 years out at least. At some point though all these low rates will come home to roost and inflation will take off more than it would have done without the meddling but I just dont see it soon

b) I'd go with the rebalancing. I would take some profits and wouldn't make an exception. Not sell all but rebalance and take some profits.
- One reason is I don't have enough conviction in where index linked bonds will go next
- Another reason is its not my particular field hence wouldn't want my portfolios having a higher weighting than originally intended and taking views in peripheral areas. I prefer to have a reason not to rebalance, e.g. strong convinction, fits with my life, an area I know well etc
- Thirdly as you say the fund has done well. Better than you probably expected. No-one really expected Brexit either. It led to lower interst rates in the UK when peope thought they could't / wouldn't go much lower. This leads to two things for me i) the gain was unexpected and a one off sort of windfall which won't be repeated ii) rates have already gone lower and the chance of them going lower still and generating significant capital gains is significantly less. So the gains on cutting rates thru Brexit will likely give way as rates rise generally.

Put another way you've had an unexpected windfall. Unlikely to be repeated. Take some profits from that windfall. Why take a higher weighting in an area you're unsure about and don't seem to have conviction in.

After that it's the usual whether you think index-linked bonds will perform better than normal bonds going forward. Or are bonds even a category you want much exposure to at all as rates rise?

Cheers
Fletch