Which strategy focuses on a combination of short-term corporate bonds and long-term government bonds?

The barbell strategy is designed to take advantage of the differing risk and return characteristics associated with short-term and long-term bonds. This approach involves investing in both short-term corporate bonds and long-term government bonds, creating a "barbell" effect where the investor holds extremes on the maturity spectrum.

By combining short-term securities that provide liquidity and stability with long-term securities that offer higher yields, investors can achieve a balanced portfolio that benefits from potential interest rate movements. Short-term bonds typically respond less to interest rate changes, while longer-term bonds can provide greater income but are more sensitive to rate fluctuations. This strategy allows an investor to manage interest rate risk while seeking to maximize yield.

In contrast, the bullet strategy involves concentrating investments in bonds with a similar maturity date, typically aiming for a specific target. Duration matching focuses on aligning the duration of liabilities and assets to mitigate interest rate risk, while the laddering strategy involves holding bonds that mature at regular intervals, providing consistent cash flow and the ability to reinvest at varying interest rates. These alternatives do not facilitate the same balance of short and long maturities as the barbell strategy.