average maturity

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.
References in periodicals archive ?
The weighted average maturity was 138 days at end-September 2017.
The Philippines said on Tuesday it accepted 237 billion pesos ($5 billion) worth of debt to be swapped with new 2025 and 2040 bonds, part of a debt management scheme that stretched its average maturity profile and resulted in interest savings.
With this transaction, the Group is going one step further in its active funding policy to align its balance sheet with its long lifetime industrial assets by lengthening the average maturity of its debt.
The new debt issues in the first quarter, especially by corporates, tended to have longer tenors, lengthening the average maturity of outstanding bonds.
By February it was back up to pre-crisis levels and, currently, the weighted average maturity of the 100 largest money-market funds is 52 days.
Some advisers say it's best to spread risk over a series of different maturities while maintaining an average maturity of the client's liking in the portfolio.
Look for a bond fund with a low average maturity of three to five years to insulate the portfolio from shifts in interest rates.
By moving this structural cash balance farther out the yield curve, to an average maturity of two years and a maximum maturity of three years for any single issue, the benefit of an upward-sloping yield curve and wider credit spreads will accrue.
For example, some policies contain unnecessarily restrictive average maturity provisions.

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