I understand what both of these are; however, why would there be such a huge difference between the two on a bond fund? My assumption/guess is that there are some older issues in there that have higher coupons/yield which is bringing the WAD down, is that correct?
The two are only loosely related. A bond’s coupon rate affects the duration but not the maturity. For a zero coupon bond, duration = maturity. For a coupon bond, duration < maturity. For a coupon bond with a LARGE coupon, duration << maturity.
Could be optionality as well bringing the duration down. 30yr FNMA TBAs habe durations ranging from 2-5yrs