I have a question how bond etf works as I can’t understand all the mechanics. When I buy stock, I bet on its price appreciation. I assume higher volatility as it can go up and down but I am free to realize the gain if that comes at any point. It is all about price.
Now there is fixed market: I am committing my investment to some time period to get the return I am promised. I am still allowed to sell the bonds and get even higher returns in case rates go down(I can reinvest in other asset classes if I have realized higher return on those bonds already). The main point is to get guaranteed yield.
What I am confused is how bond ETF work, they are similar to bonds? Is their price like a stock or a bond? Assume it is holding 100 bonds, does it roll every time the bond expires? What happens if some of the bonds default? I am trying to understand how does this relate to stock or bond world and what do I get from it compare to physically buying 100 bonds on my own? If the rates go up and the bonds I hold depreciate at least I can wait until its maturity and get the promised return while with ETF without any additional loss due to price drop. Is ETF more sensitive to rates move in any way?