know debt jargon

Average Maturity:  This the average holding period of all the instrument held in a portfolio.  This measure is calculated as the remaining period for which each instrument is to be held before it falls due.  Each instrument given weights according to the sums invested in them.  Average maturity f fund provides an indication as to whether the fund follows a short term or a long term strategy.  A  low average matuirty is  typically resorted when interest rate is moving up.  That is because shorter term instruments suffer a lower fall during such phases than longer term ones.  Once interest rates are on declining phase, many funds go for instruments with longer maturity.

A short term fund may for instance hold long term debentures but this does not mean it holds the instruments for the long term.  The fund may have entered such instruments in the secondary market at a time when residual maturity is not too high.

Modified Duration:  Modified duration measures how sensitive the fund portfolio is to changes in interest rates.  The price of a bond and yield on the bond are inversely related. When interest rates decline, bond prices rally and vice-versa.  Modified duration captures the extent of price changes for a given change in the interest rates or yield.

If the modified duration of a portfolio with average maturity of five years is four then every one percent move in the yield of a five year bond the portfolio value or price moves 4 percent.  Generally it is prudent to hold longer druation portfolios during a falling interest rate cycle.

Credit Rating:  A credit rating is a opinion on company's ability to repay  loans given to it both the interest payout and principal repayment.  The higher the credit rating, lower the chance of default.  Therefore invetor can look at the credit rating of the instruments in the portfolio  and figure out whether the fund is taking a risky bets to imporve yields or if it is managing reasonable returns actively chruning the portfolio.

Yield to maturity (YTM) This is the annaulised return the fund will get if all the instruments are held until the respective maturity (without selling them before they mature) while the coupon rate is the interest receivable on the face value of each bond, the ytm is based on the current market price of each bond ( or fund)

It is return calculated on the current market price of the bonds in the fund using the interest receipts (coupon rate) and maturity amount as inflows

For investment at face value YTM will be equivalent to the coupon rate.  In products such as fixed matuirty plans (FMP) the YTM of the instruments in which the fund invests provide a broad indication of the returns that can be expected from the fund.  However, in other cases where the fund may sell bonds before matutity, the YTM is not necessarily the return an investor gets on his fund.