1. The two are very different from each other, although loosely used as same in the market.
2. A bond fund’s maturity is the total length of the time when the principal is paid back.
3. So, for a government security of 10 years, the holder of the paper will earn interest for 10 years after it is purchased, and will get back the principal amount thereafter, with no further accrual.
4. Maturity is, therefore, a definite number which remains constant for a bond (in terms of when it would mature), while duration is a concept.
5. Although expressed in number of years, duration may vary between fund managers for the same bond.
6. It is usually used to measure the interest rate sensitivity of a bond due to the up and down movements of yields and bond prices.
2. A bond fund’s maturity is the total length of the time when the principal is paid back.
3. So, for a government security of 10 years, the holder of the paper will earn interest for 10 years after it is purchased, and will get back the principal amount thereafter, with no further accrual.
4. Maturity is, therefore, a definite number which remains constant for a bond (in terms of when it would mature), while duration is a concept.
5. Although expressed in number of years, duration may vary between fund managers for the same bond.
6. It is usually used to measure the interest rate sensitivity of a bond due to the up and down movements of yields and bond prices.