Weighted Average Maturity (WAM)

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Nicole Sivens

Nicole is a personal finance educator and writer who loves all things money management.

Nicole has launched several personal finance blogs, led content strategy at a start-up, and has written for the Wirecutter, Nerdwallet, and many other nationally-recognized financial sites. Nicole's first book, "The 7-Day Financial Fix: Getting your money right one step at a time,"  was published in late 2019.

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Rachel Siegel, CFA

Rachel Siegel, CFA is one of the nation's leading experts at ensuring the accuracy of financial and economic text.

 Her prestigious background includes over 10 years of experience in creating professional financial certification exams and another 20 years of college-level teaching.  Rachel has served as Academic Director at Bloomberg, as well as Exam Development Director at the CFA Institute. She holds a BA in English and an MBA, both from Yale University.

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Updated August 22, 2020

What Is Weighted Average Maturity?

Weighted average maturity or WAM is the weighted average amount of time until the securities in a portfolio mature.

The higher the WAM, the longer it takes for all of the holdings in the portfolio to mature. WAM is used to manage debt portfolios and to evaluate the profitability of the portfolio managers.

How Does Weighted Average Maturity Work?

The WAM can be useful to investors in bond portfolios or in securities that are backed by debt securities, such as mortgage-backed

Weighted Average Maturity Calculation with Example

The WAM can be calculated by determining the weight of each maturity in the average, multiplying that weight by the security’s maturity, and summing the weighted maturities. The weight is the proportion of total portfolio value that each security represents. 

For example, assume you want to find the WAM of three loans, Loan X is for $2,000 that matures in 10 years, Loan Y is for $5,000 and matures in 8 years, and Loan Z is for $10,000 and matures in 1 year:

  • Determine the weight of each loan by finding its percentage of the total amount, in this case, $17,000.
  • Now, multiply the weight of each loan by the number of years left until the loan’s maturity. 
  • Add these weighted maturities to determine the WAM. 

The portfolio of loans will mature in 4.11 years, according to its weighted average.

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At InvestingAnswers, all of our content is verified for accuracy by Rachel Siegel, CFA and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Weighted Average Maturity (WAM).
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Rachel Siegel, CFA is one of the nation's leading experts at ensuring the accuracy of financial and economic text.  Her prestigious background includes over 10 years of experience in creating professional financial certification exams and another 20 years of college-level teaching.

If you have a question about Weighted Average Maturity (WAM), then please ask Rachel.

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