Barbell strategy

A “barbell… investment strategy means weighting a portfolio towards the two extreme ends of an asset class with nothing in the middle.

In weightlifting, a barbell is a long and relatively light metal bar to which heavy weights are attached at both ends. Similarly, a barbell investment strategy means weighting a portfolio towards the two extreme ends of an asset class with nothing in the middle. This generally means the investor ends up with a combination of lower-risk, lower-return and high-risk, higher-return holdings.

Unlike a real barbell, the amount invested at each end of the portfolio isn’t necessarily the same. For example, you might have 80% in safer assets and 20% in riskier assets, depending on what will produce the best balance of risk and return.

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