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Barbell Strategy |
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Barbell strategy A fixed income strategy in which the maturities of the securities included in the portfolio are concentrated at two extremes. Barbell Strategy An investment strategy whereby a portfolio consists predominantly or exclusively of bonds with very short and very long maturities. The investment strategy behind a barbell portfolio is to invest in high-yield bonds with long maturities to maximize return while also maintaining investment-grade bonds with short maturities to minimize risk and maximize liquidity. Barbell strategy. When you use a barbell strategy, you invest equivalent amounts in short-term and long-term bonds, creating the shape that gives the strategy its name. The goal is to earn more interest than intermediate-term bonds would provide without taking more risk. For example, you might buy a portfolio of bonds, with some that mature within a year or two and an equal number that mature in 30 years. When the shorter-term bonds come due, you replace them with other short-term bonds. It's a different approach from laddering your bond investment, often with a portfolio of intermediate-term bonds, so that your bonds mature in a rolling pattern every few years. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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GRAHAM: The barbell strategy is geared toward short-term phenomena that professional money managers can handle, but it's difficult for most individuals. We believe that our prudent risk management and the consistent deployment of our barbell strategy will position the company to perform through this environment and for the long-term. After taking into account the effect of interest rate swaps, at June 30, 2007, our portfolio of short duration assets was effectively comprised of 43% fixed-rate, 19% adjustable-rate and 38% floating-rate exposure, which is consistent with the historical portfolio composition of our portfolio in our barbell strategy. |
Barbell Strategy |
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