average maturity

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Average maturity

The average time to maturity of securities held by a mutual fund. Changes in interest rates have greater impact on funds with longer average maturity.

Average Maturity

In a mutual fund containing debt securities, the average amount of time until the debt securities mature. It is calculated by adding together the total amount of time until maturity and dividing by the number of debt securities in the mutual fund. The shorter the average maturity is, the less the fund's share price will fluctuate with changes in interest rates. See also: Weighted average maturity.

average maturity

The average time to maturity of all the debt securities held in a portfolio. A relatively short average maturity results in smaller price fluctuations in response to changes in market rates of interest. A short average maturity subjects the owner of a debt portfolio to the risk that maturing debt will be replaced with debt carrying a lower interest rate. Average maturity is an important consideration for investors who hold bond and money market funds.
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The reviewed MMFs seek to limit interest rate and spread risk by maintaining their weighted average maturities (WAM) and weighted average lives (WAL) below 60 days and 120 days, respectively.
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The issuance of three perpetual bonds during the year reflected the attractiveness of current low rates and helped extend average maturities of NFS debt, which rose to 8.9 years.
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The ministers already concluded a political agreement, on 12 April, to increase the average maturities for both countries from 12.5 to 19.5 years.
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Average maturities for money funds came down last fall, although perhaps not as sharply as some would have expected, after the industry was shaken by a fund that failed to keep its dollar par value.
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Acquisitive companies or those requiring cash to meet burn rates or capital expenditures typically specify short maximum and weighted average maturities and greater amounts of liquidity.
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Ultra-short bond funds currently have average maturities of 2.5 years, according to Morningstar Inc., the mutual fundtracking company in Chicago, and average yields of 6.6%.
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