Barbell vs Laddered portfolio

[archived_user]

Is it fair to say that barbell portfolios are more liquid than laddered portfolios because they have more short term bonds than laddered? I always thought laddered was more liquid because I thought I read that somewhere in CFA material but MM Mock#4 in PM section says that Barbell is more liquid…anyone else see this discrepancy?

 

[archived_user]

Assuming no other considerations, laddered portfolio is better for liquidity management. Dunno where does the barbell more liquid idea come from - there are probably some other circumstances (but I still find it rather unlikely).

 

[archived_user]

Philc87 wrote:
Is it fair to say that barbell portfolios are more liquid than laddered portfolios because they have more short term bonds than laddered? I always thought laddered was more liquid because I thought I read that somewhere in CFA material but MM Mock#4 in PM section says that Barbell is more liquid…anyone else see this discrepancy?

Are you sure you’re not mixing it up with reinvestment risk?
Barbell’s reinvestment risk is greater than laddered. However, laddered is better for liquidity.

 

[archived_user]

The specific question has barbell with a large % of bonds in the short duration, which is why it is more liquid.
Generally, a laddered portfolio has better liquidity but you have to look at the context of the question.

 

[archived_user]

yeah I am on the same page as you guys, the answer to MM Mock#4 Q20 in PM says “since liquidity decreases as maturity increases, the barbell portfolio will have greatest liquidity because it has highest percentage of short term bonds and the laddered portfolio will have moderate liquidity…

 

[archived_user]

125mph wrote:
The specific question has barbell with a large % of bonds in the short duration, which is why it is more liquid.
Generally, a laddered portfolio has better liquidity but you have to look at the context of the question.

ok, sounds like a weird question