So I am slightly confused when it comes to making profit on bonds, For arguments sake I will use a Vanguard's ETF called, "Vanguard Short-Term Corporate Bond ETF (VCSH)" Now I understand the basics of Bond ETF's, since this bond has a short term maturity, it will have less risk than lets say a bond with long term maturity. This specific bond has an average annual return of 3.01%, lets look at the first quarter, the bond ETF through Vanguard states that the bond yielded a 1.71%, yet the listed price of the bond barely moved 1%. The only logical answer has to be the dividend, (lots are given, about 4 per quarter), still does not make perfect sense. Another confusing point is when the bond price is locked at a range bound market (end of 2013 to about midway of 2015) The ETF had a profit of 4.87% during that time period but the price of the bond barely moved. The only way it could of moved that much was the dividends, but the dividends could not of made that much (each one is an added .15% to the account) How can a bond ETF create 23.51% over eight years, yet the underlying price of the bond and added dividends can not possibly make that much cumulative returns since the funds initial start. Please help, Thanks in advance.
Welcome to the board @Thatguy42! Have you called your broker and discussed your question. I have been trading for many years but never bought bonds so I would not have be the person to answer your question. Give it a little time and sure one of our members has played the bond market. TTT
