Barbell Portfolio
Barron's Finance & Investment Dictionary:
Top
Barbell Portfolio
portfolio of bonds distributed like the shape of a barbell, with most of the portfolio in short-term and long-term bonds, but few bonds in intermediate maturities. This portfolio can be adjusted to emphasize short- or long-term bonds, depending on whether the investor thinks interest rates are rising or falling. A portfolio with a higher concentration in medium-term bonds than short- or long-term bonds is called a bell-shaped curve portfolio.
| Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Bankruptcy | |
| Barefoot Pilgrim, Bargaining Unit |
Related Videos:
Top
Barbell Portfolio
Barron's Banking Dictionary:
Top
Barbell Portfolio
Portfolio of Investment Securities concentrating the bulk of assets in bonds or other securities with very long or very short-term maturities. This is a more sophisticated form of investing than laddering (the practice of buying bonds in each maturity range, producing a higher return), but it may create liquidity risk if a bank wants to restructure its portfolio. More frequent adjustments are necessary to maintain the desired asset mix, especially when rates change.
Barbelling an investment portfolio through the heavy use of short-term and long-term issues, with few securities of intermediate maturity, is designed to maximize liquidity, with minimal market impact from the short-term issues, while the long-term debt brings the highest yield and the highest return. This strategy, of course, does not make much sense when the yield curve is flat, that is, when short-term rates are roughly the same as long-term rates, or when the yield curve is inverted, and short-term rates are higher than those at the long end. See also Laddered Portfolio.
Post a question - any question - to the WikiAnswers community:
Copyrights:
Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
Read more