Question on duration vs maturity

[Jeffreyalan]

Can anyone educate me on what I should be looking at for a bond ETF when it comes to maturity vs duration? For example, I want to target the 10 year Treasury in an ETF. IEF has a duration of 7.39 and an avg maturity of 8.49. TLH has a duration of 10.84 and an avg maturity of 15.02.

Which of those numbers should I be focused on when trying to target a specific maturity range?

Thanks!

[ochotona]

My understanding is that for portfolio risk, duration matters. Maturity is a calendar date, but because not all bonds are created equal (default risk, call risk), duration is related to but not equal to maturity. Only for Treasuries are they the same.

[boglerdude]

Why not barbell, put long and short in your bond allocation

[Kriegsspiel]

Duration tells you how much the price of the bond/fund will go up (or down) if the interest rate falls (goes up) 1%.

So if you have a bond fund with a duration of 10, and if the interest rate goes up 1%, then your bond/fund will go down in value 10%

[ochotona]

They actually back-calculate the duration of a bond fund by observing market price change as a function of interest rate change. It's empirical, not bottoms up based on what they own. Complicated stuff.