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Discussion Starter #1
Please bear with me. I'm still learning about the ins and outs of ETFs.

The share price of bond ETFs seem to be mainly dropping. I'm assuming the coupon rates of the individual bonds within any given bond ETF are not changing. Should I then expect the payout per share to remain the same? Will the yield (payout/price) then increase?

Appreciate any comments on dividend ETFs as well. Thanks in advance.
 

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The share price of bond ETFs seem to be mainly dropping. I'm assuming the coupon rates of the individual bonds within any given bond ETF are not changing.
Yes, and no.
The coupon rate of individual bonds do not change.
However, the weighted average coupon rate of a bond ETF could change as they buy/sell bonds.
The holdings of an ETF are dynamic and they may have rolled over or swapped lower coupon bonds for higher or vice versa.

Regarding the dropping of unit prices of bond ETFs - it can be due to many reasons.
Increasing credit risk, increase in interest rates, liquidity issues, and so on.
Should I then expect the payout per share to remain the same? Will the yield (payout/price) then increase?
No, the payouts will depend on (a)the coupon payments of the bonds held within the ETF (b)less the ETF fees (c)decision by the ETF to pay out vs retain

Assuming no changes in individual holdings of the ETF between your comparison periods, the payout should remain the same and yes the yield is higher.
 

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Discussion Starter #3
Thanks for your response. As a follow-up, do bond indexes change individual bonds often, thus causing passively managed bond ETFs that mimic bond indexes to keep pace (ex Claymore's CBO mimicing the DEX 1-5 Yr Corporate Bond Index)?
 

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Thanks for your response. As a follow-up, do bond indexes change individual bonds often, thus causing passively managed bond ETFs that mimic bond indexes to keep pace (ex Claymore's CBO mimicing the DEX 1-5 Yr Corporate Bond Index)?
Don't think so. It should be simply rolling over the bonds as they mature.
So there is still routine "churn" to replace maturing bonds, but not the same way as a actively managed bond fund may have.
But you should still check the prospectus and other background material.
Since the CBO is based on the DEX index, it would depend on the churn within the index.
for example, I don't know if the index replaces a bond prior to maturity if its credit rating gets downgraded.
 
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