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 15, 2630 barbell, 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?