Is Cash Flow matching duration matched?

CFA Level III Fixed Income
#1

In Schweser Book3 p40, it mentions that Cash flow matching also cause durations to be matched.

However, if that is the case, why would we even need combination matching?

I am confused.

#2

basic cash flow matching -> only asset cash flows that occur prior to liability due date can be used. – and yes this will be duration matched.

symmetric cash flow matching - allows use of short term funds borrowing to meet the liability. [and this reduces cost of funding the liability]

combination matching or horizon matching - is a combination of the two … provides for cash flow matching during the initial few years + it is duration matched.

Advantage:

  1. Provides for cash flows in the initial few years.
  2. Most of the yield curve shifts usually happen in the first few years which the above will tackle. So there is more confidence overall in the approach.

Disadvantage:

More costly to fund the liabilities