What is a barbell strategy?

When applied to fixed income investing, the barbell strategy advises pairing short term bonds with long-term bonds. The result gives the investor a cushion of long-term bonds in case yields fall, and a chance to do better if short-term yields rise. In practice, the barbell strategy is more frequently applied to bond portfolios.

What is a barbell bond investing strategy?

The key behind a barbell bond investing strategy is close attention to the short-term bonds in a rising yield curve environment. As the short-term bonds keep maturing, they are reinvested into new short-term bonds, increasing the overall value of the investments and the value of the portfolio. How Does the Barbell Bond Investing Strategy Work?

Can a barbell strategy be used in fixed-income investing?

In fixed-income investing, a barbell strategy can be employed by purchasing short- and long-term bonds, but no intermediate-term bonds. Short-term bonds are safer than long-term bonds but also tend to have lower yields.