Hello,
Schweser says “A barbell is a portfolio that contains short and LT bonds. As opposed to using ST Treasuries, corporate securities are used at the front end of the yield curve with LT Treasuries at the long end of the yield curve”
I understand what a barbell strategy is. However, why do we use corporates at the short end instead of treasuries?
Thanks!
The curriculum says that some investors do that, but not why they do it.
Your quote from Schweser makes it sound as though all barbell investors do it; that’s not what the curriculum says.
If I had to guess…I’d think they do it to pick up extra yield on the short end with less duration. Sort of sounds like the opposite of horizon or combination matching approach. And schweser doesn’t say all do it.
got it, some do it not all. Thanks!