Barbell strategy
A bond portfolio built from two extremes instead of the middle: very short and very long maturities with nothing in between, reaching the desired average duration with more flexibility.
How to read the number
The short end supplies cash for purchases without forced sales, the long end supplies sensitivity to falling rates, and the average duration matches that of an evenly spread set.
When the metric lies
Equal average duration does not mean equal behaviour: when the curve moves non-parallel the structure parts company with an even ladder, and the difference appears precisely in the unusual rate move.
Also known as: barbell maturity structure