The weighted average remaining term (WART) is a measure of the average time to maturity of a fixed income portfolio.
WART is also known as maturity weighted average or WAM.
It is often used for mortgage-backed securities (MBS) and other asset-backed securities (ABS), although it can be applied to any fixed income portfolio.
Some investors may prefer to have access to investments with a specific repayment profile, which makes WART a useful tool for comparing alternative investments.
WART is particularly important in assessing the portfolio’s interest rate and prepayment risk.
Average life is the average length of time it takes to pay off the outstanding principal on a debt instrument, such as a treasury bill, bond, loan, or mortgage-backed security.
Realized yield is the actual profit earned during the investment’s holding period and may include dividends, interest payments, and other cash payments.
Revolving debt with a variable coupon is repaid every week, with the principal reinvested at a new interest rate, which is reset at a fixed spread relative to the base rate.
The 48 Hour Rule refers to the part of the mortgage allocation process related to the purchase and sale of Mortgage Backed Securities (MBS) to be announced (TBA).