List of Floating Rate ETFs
Floating rate bond ETFs are innovative debt funds that hold specific types of bonds made up of two parts to arrive at a final yield—a variable component, which correlates with a reference rate, and a spread. The combination of these two components is the total yield, which will float (fluctuate) over time. So if you are an investor that is trying to minimize interest rate risk, then these types of ETFs may be a good fit for your portfolio.
FLOT - iShares Floating Rate Bond ETF
This float rate ETF from iShares tracks an index composed of U.S. dollar-denominated, investment-grade floating rate bonds with remaining maturities between one month and five years. And some of the reasons iShares believes this is a good asset is the fact that it gives investors exposure to U.S. floating-rate bonds, whose interest payments adjust to reflect changes in interest rates. It also gives you access to 300+ shorter-term investment-grade bonds in a single fund. This allows you to put cash to work and manage interest rate risk.
For more information on FLOT, then feel free to visit the iShares website for this fund
FLRT - Advisor Shares Pacific Asset Enhanced Floating Rate ETF
This float rate fund looks to provide a high level of current income by selecting a focused portfolio comprised primarily of income producing floating rate loans and floating rate debt securities (commonly referred to as bank loans, leveraged loans or floating rate loans), which consist of senior secured and unsecured floating rate loans, secured second lien floating rate loans, and other floating rate debt securities of domestic and foreign issuers. If you want to learn more about FLRT, then visit the fact sheet on the Advisor Shares website.
FLRN - SPDR Barclays Capital Investment Grade Floating Rate ETF
This float rate ETF is an SPDR that tracks the Barclays U.S. Dollar Floating Rate Note < 5 Years Index. As for the index, it consists of debt instruments that pay a variable coupon rate, a majority of which are based on the 3-month LIBOR, with a fixed spread. The Index may include U.S. registered, dollar-denominated bonds of non-U.S. corporations, governments and supranational entities. Excluded from the Index are fixed rate bullet bonds, fixed-rate puttable and fixed-rate callable bonds, fixed rate and fixed to floating capital securities, bonds with equity-linked features (e.g. warrants and convertibles), inflation-linked bonds, and securitized bonds.
FLTR - Market Vectors Investment Grade Floating Rate
This floating rate fund from Van Eck correlates with The Market Vectors®US Investment Grade Floating Rate Index (MVFLTR). The benchmark consists of U.S. dollar-denominated floating rate notes issued by corporate issuers and rated investment grade by at least one of the three rating services: Moody’s, S&P or Fitch. You can get the full details for FLTR on the Van Eck website.
EFR - Eaton Vance Senior Floating-Rate Trust ETF
This fund from Eaton Vance looks to provide broad exposure to the floating-rate loan market by providing diversified exposure to the asset class. The fund provides exposure to the loan markets’ many sectors, credit tiers, and issuers. The low durations may help reduce interest-rate risk and lower portfolio volatility. To learn more, check out the EFR fact sheet on the Eaton Vance website.
SRLN - SPDR Blackstone/GSO Senior Loan ETF
Our second SPDR on this list seeks to provide current income consistent with the preservation of capital. The Fund invests substantially all of its assets in the Blackstone/GSO Senior Loan Portfolio, a separate series of the SSgA Master Trust with an identical investment objective as the Fund. The Portfolio seeks to outperform the Markit iBoxx USD Liquid Leveraged Loan Index (the "Primary Index") and the S&P/LSTA U.S. Leveraged Loan 100 Index (the "Secondary Index") by normally investing at least 80% of its net assets (plus any borrowings for investment purposes) in Senior Loans.
For purposes of this 80% test, "Senior Loans" are first lien senior secured floating rate bank loans. If you want to learn more, then visit the SRLN page.
BKLN - Power Shares Senior Loan ETF
This fund from Power Shares correlates with the S&P / LSTA U.S. Leveraged Loan 100 Index, which is designed to track the market-weighted performance of the largest institutional leveraged loans based on market weightings, spreads, and interest payments. For full details, you can visit the Power Shares fact sheet for BKLN.
- FTFR - First Trust actively managed floating-rate ETF
- USFR - WisdomTree Bloomberg Floating Rate Treasury Fund
- FLRT - Advisor Shares Pacific Asset Enhanced Floating Rate ETF
So that is the list of floating rate bond ETFs for now, but as always, subject to change. For example, when FTFR launches, I will update this list as well as include any new flat rate fund filings (say that five times fast). And if any of these funds are delisted, I'll update the list as well, so check back often.
And keep in mind that while ETFs offer a lot of advantages, like the tax benefits, they are not without risk. No asset is risk-free. So be sure to research each floating rate fund on this list before making any trades.
Look under the hood and see what is in the ETF, take a look at its performance history and see how it reacted to different market conditions. And if you have any questions or concerns, be sure to consult a financial professional such as a financial advisor or your broker. However, once you have conducted your due diligence, then I wish you success (and profits) for all of your trades.
Disclaimer: At the time of the publication of this article on floating rate ETFs, I do not have any open positions in any of the funds on this list