Final answer:
A corporate bond ETF ideal for income typically emphasizes dividends, which come from the bonds' coupon rates, and potentially capital appreciation. Diversification within the ETF can provide risk reduction by spreading exposure across different bonds.
Step-by-step explanation:
When evaluating a corporate bond exchange-traded fund (ETF) for income, we are primarily discussing one that offers a reliable stream of interest payments, or dividends. These dividends come from the coupon rate of the bonds held within the ETF's portfolio. While growth can refer to an increase in the ETF's value over time, in the context of bonds, the term more commonly used is capital appreciation, which indicates an ETF's potential to increase in market value.
Risk reduction, another key concept, is achieved through diversification. By investing in an ETF, you spread the risk across various bonds or issuers, which can protect against the volatility associated with any single investment. It's important to note that corporate bonds are also subject to interest rate and credit risks which are factors influencing return.