Ladders, Barbells and Bullets
Three ways of arranging maturities across a bond portfolio, each with a different response to a change in the shape of the yield curve.
MadStockAlerts Research · Updated August 29, 2026
What to take away
- A ladder spreads maturities evenly and reinvests as each matures.
- A barbell concentrates at the short and long ends, with nothing in the middle.
- A bullet concentrates around a single target maturity.
- The three respond differently to a change in the curve's shape rather than its level.
- A ladder's main practical benefit is a scheduled series of reinvestment dates.
MAD Academy Training Video · 0:46
Three Ways to Arrange Maturities
A ladder, a barbell and a bullet hold the same asset class and produce completely different sensitivities to rates.
This lesson is part of a Stock Alerts + Tools plan.
The three structures
| Structure | Maturities | Reinvestment |
|---|---|---|
| Ladder | Spread evenly across a range | A rung matures each period and is reinvested at the long end |
| Barbell | Concentrated at the short and long ends | Frequent at the short end, none at the long |
| Bullet | Concentrated around one date | Nothing until the target, then everything at once |
All three can be arranged to have the same average duration, which is what makes the comparison meaningful. They differ in how the duration is distributed, not necessarily in how much of it there is.
Scroll the chart sideways to see all of it.
- Ladder
- Barbell
- Bullet
How each responds to the curve
A parallel shift in the whole curve affects all three similarly, because their durations match. The differences appear when the shape changes.
| Curve change | Barbell against bullet |
|---|---|
| Steepening: long yields rise relative to short | The barbell's long leg suffers more |
| Flattening: long yields fall relative to short | The barbell's long leg benefits more |
| Parallel shift | Similar, since duration is matched |
| Any large move in either direction | The barbell benefits from greater convexity |
The last row is the mathematical point. For a given duration, a barbell has more convexity than a bullet, which means it gains more from a large fall in yields and loses less from a large rise. That convexity is usually paid for in a slightly lower yield.
What a ladder is actually for
A ladder's appeal is less about curve positioning than about process. Something matures on a schedule, which produces a regular reinvestment at whatever rates prevail and removes the need to decide when to buy.
- It averages across rate environments rather than committing at one point.
- It produces predictable liquidity, which is useful where money is needed on a schedule.
- It removes a timing decision, which is a decision that is unlikely to be made well.
- It requires holding individual bonds, which brings the liquidity and diversification considerations that come with them.
The third item is the substantive one. A ladder is a rule rather than a forecast, which is the same argument that appears throughout this library for any structure decided in advance.
The practical constraints
- Building any of these with individual bonds requires enough capital to diversify across issuers as well as across maturities.
- Transaction costs on small bond purchases are embedded in the price and can be substantial.
- Credit analysis is required per issuer, which is a per-holding cost that a fund distributes.
- Defined-maturity bond funds exist that replicate a ladder rung, which is a structural alternative with its own trade-offs.
The first is the binding constraint for most individual portfolios. A ladder of ten rungs across a diversified set of corporate issuers requires a substantial number of separate holdings, and a ladder of Treasuries does not, since credit diversification is not required.
Reinvestment risk, and which structure carries it
Every fixed income structure is exposed to two risks pulling in opposite directions, and the choice between them is largely a choice about which one to carry.
| Risk | What it is | Worst for |
|---|---|---|
| Interest rate risk | The price falls when yields rise | Long maturities |
| Reinvestment risk | Maturing proceeds are reinvested at lower rates | Short maturities |
A ladder carries both in moderation, which is most of its appeal: something matures every period, so some proceeds are always being reinvested at current rates while the longer rungs retain their yields.
A portfolio entirely in short maturities is frequently described as safe. It has minimal interest rate risk and maximal reinvestment risk, and in a period of falling rates the income from it falls continuously.