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.