What Does Average Maturity Mean In Investing World?

This term is more tricky than some other terms we have discussed so far but of course I will explain it in an easy way for everyone to understand it.

This term is also called average weighted maturity.

The whole meaning of the term “Average maturity” in the investing world is basically the average of the stated maturity dates of the debt securities in the portfolio.

For the most part the longer the average maturity, the greater the fund’s sensitivity to interest-rate changes. This of course means greater price fluctuation

The shorter shorter average maturity usually means a less sensitive and at the same time  consequently and less volatile portfolio.

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