How would you choose an appropriate ladder

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Reference no: EM131162490

The performance of the laddered portfolio structure with five equally spaced maturities proved to be the best among the ladders investigated. Similarly, the performance of the 1-5, 26-30 bar bell, with 20% invested in the long end, proved the best among the barbells. The BONDS model outperformed these strategies in the historical simulation over a period of rising rates.

a) How would you expect these strategies to compare with the BONDS model in a period of falling rates?

b) How would you choose an appropriate ladder or barbell strategy without the benefit of 20/20 hindsight?

c) What benefits does the BONDS model have over either a ladder or barbell approach to portfolio management?

Reference no: EM131162490

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