The Difference Between "Maturity" and "Duration"

BOND BASICS: Each plays a role in understanding interest-rate risk, but duration is more complex

Adam Zoll 7 June, 2012 | 12:17PM

Question: I hear the terms "average maturity" and "average duration" used to describe bond funds. They sound similar, so what's the difference?

Answer: "Maturity" and "duration" may sound somewhat alike, and both measures are expressed in years. However, they mean very different things.

Maturity is pretty straightforward. A bond's maturity is the length of time until the principal must be paid back. So a 10-year bond will earn interest for 10 years from the date it is purchased. At the end of that time period the bond's principal is repaid to the owner of the bond and interest payments cease.

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About Author

Adam Zoll  is an assistant site editor with Morningstar.com, the sister site of Morningstar.co.uk.

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