Can you someone please explain how much principal (or final distribution) I get back when this target-maturity ETF "matures" and makes final distributions (assuming no default)? Assume I own 1 share.

Name: Guggenheim BulletShares 2018 Corporate Bond ETF Shares Outstanding: 5,100,000 Total Managed Assets: 104,931,364 NAV: 20.57 Market Price: 20.64 Price per share: 20.68 Current Portfolio Holdings (par): $92,987,000

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Adding a couple more assumptions, I'd compute about $18.23 would be that pay out in 2018. This is computed by taking the Current Portfolio's Holdings par values and dividing by the outstanding shares(92987/5100 for those wanting specific figures used).

Now, for those assumptions:

  1. The ETF doesn't buy any more bonds. If the fund acquires more assets, then there could be more to distribute as I'm not seeing how much the fund holds currently in cash that could be used to buy bonds maturing in 2018.
  2. There isn't a great deal of redemption on the ETF either. If there is, then there could be some portfolio assets that are redeemed out early for shares that I'm not sure how that would affect the distribution. In a stock ETF or a traditional bond ETF, if the NAV gets higher than the share price, then institutional investors may come and buy up blocks of shares that can be exchanged for securities at the NAV price in-kind and thus make a profit which keeps the difference of price and NAV low in the case of an ETF. I'm not sure how this kind of ETF would handle the case if a bunch of current shareholders decided to dump their shares.

Something to keep in mind is that bonds can valued higher than their face value if the coupon is higher than other issues given the same risk. If you have 2 bonds maturing in 3 years of the same face value and same risk categories though one is paying 5% and the other is paying 10% then it may be that the 5% sells at a discount to bring the yield up some while the other sells at a premium to bring the yield down. Thus, you could have bonds worth more before they mature that will eventually lose this capital appreciation.

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