How do they construct etf with say 2-3y duration. I would understand the idea is to create a basket of bonds with such duration and keep it for 2-3y until they all mature to realize the expected book yield. But obviously etf is continuously evolving so they constantly sell and buy bonds to maintain average duration in that range? So say they buy 3 year bond and then 1.5 years later they sell this one and buy a new another 3y bond?
Another question is how do I realize the return or yield. There is a lot of market price fluctuation in etf share affecting returns which is different from buying and holding bonds to realize the yield. How would I earn the yield on this etf as none of the bonds actually deliver face value? When I buy such bond etf all I own is a stock share of that etf and to compute the return I can compare prices today and 3 years from now but in 3 years this etf is just holding a basket of yet another bonds with duration of 3 years.