The difference between the average maturity and Macaulay duration of a debt fund

What is the difference between the average maturity and Macaulay duration of a debt fund? Should we match the investment time horizon with average maturity or Macaulay duration for debt funds? - Anant Garg These are relatively technical terms but let me try and provide a more simplistic explanation. Average maturity is simply the weighted average of maturities of all bonds in a portfolio. For example, a portfolio consists of two bonds - one maturing in 10 years and the other maturing in five years and both these bonds have an equal weightage. So, the average maturity of this portfolio would simply be 7.5 y

This article was originally published on March 01, 2021.