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What is a barbell portfolio?

A barbell portfolio is divided into two sections: a low-risk side of short-term bonds and a high-risk side of long-term bonds. A bond barbell is an active strategy, since both sides will need to be repurchased as short-term bonds mature and long-term maturities shorten.

What is a barbell strategy?

The barbell is a fixed-income portfolio strategy where half of the holdings are short-term instruments and the other half are long-term holdings. The barbell strategy allows investors to take advantage of current interest rates by investing in short-term bonds, while also benefitting from the higher yields of holding long-term bonds.

Should you invest in a barbell portfolio?

The barbell portfolio strategy can be effective for bond investors who don't want to risk having too much of their capital tied up in long-term bonds in case rates rise. By keeping a portion of the portfolio in short-term bonds, you can keep more cash accessible for investing in new bonds.

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