iShares Launches Floating Bond ETF (FLOT)

Continuing a recent trend on the fixed income side of the ETF arena, iShares announced the launch of an ETF that offers exposure to floating rate debt. The new Floating Rate Note Fund (FLOT) will seek to replicate the Barclays Capital US Floating Rate Note < 5 Years Index, a benchmark that includes about 300 dollar-denominated, investment grade floating rate debt securities with less than five years remaining to maturity. Most bond ETFs contain fixed rate bonds that pays a predetermined coupon over the life of the obligation. That exposes investors to interest rate risk; rising rates make existing debt less attractive compared to new debt being issued with higher coupon rates (conversely, rate cuts enhance the yield profile of existing products). The coupon rates for floating rate debt are generally set relative to a reference rate; for example, a security may pay a coupon equal to 3-month LIBOR plus [...] Click here to read the original article on ETFdb.com. Related Posts: Van Eck Launches Floating Rate Debt ETF (FLTR) Guggenheim Plans Active Senior Loan ETF Q&A With Dan Weiskopf: Inflation Concerns And ETFs (Part II) April ETF Roundup: Launches, Filings, and Closures Van Eck Plans Specialty Finance ETF