1. User Chris W. Rea answered:
When interest rates rise, the market value of 20-year bonds will drop, and drop more than shorter-term bonds would. Your principal is not protected in the short term. Principal is only guaranteed returned at the 20-year maturity of those bonds. But, oops, there is no maturity on the 20-year bond ETFs because every year the ETF rolls the 19-year positions into new 20-year positions! ;-)
2. Moderator JoeTaxpayer answered:
A bond ETF will hold a basket of many, many bonds. As individual bonds mature, the fund reinvests in newer ones. These can be newly issued bonds or existing ones in the secondary market with time till maturity.
Bond funds, on the other hand, don't have a set maturity date. You may find that when you need to get your money back, you have to sell shares—and these shares may fetch a lower price than when you initially bought them in a rising-rate environment.
Question 1: Please explain the bolded? How's there no maturity? 2 asserts that there is?
Question 2: How does 3 figure in my confusion? I know that a bond ETF can operate as long as desired by the open-end investment companies or unit investment trusts, but no maturity?