Hi all,
rather a novice when it comes to bond etfs. Obviously, with a standard bond, you would receive your coupon rate at determined coupon dates and finally receive your issue price back on the maturity date.
How do Bond ETF’s work exactly? Could someone please explain, id greatly appreciate it.
Thank you
It depends on the ETF.
I believe they usually invest in a series of a bonds, with an average duration indicated and an average yield to maturity.
As the bonds they hold expire they reinvest the money.
Check the factsheets of the bond for information. I imagine that some ETFs share the bond income with ETF-holders/investors and others reinvest the income in the ETF.
Not investment advice. I tend to invest only in equities, not bonds.