iShares Floating Rate Bond ETF (FLOT)
Fed Holds Rates Steady, May Hike Ahead: ETFs in Focus
The Fed held rates steady but a September hike is gaining traction as inflation risks persist. Here are the ETFs that could benefit.
FLOT: Simple Quality Floating Rate Bond, One Step Above T-Bills On Risk-Return
High-quality floating rate bonds have broadly similar characteristics to t-bills, with slightly higher yield, risk and volatility. FLOT is a simple index ETF investing in these securities, with a 4.0% SEC yield. Income could grow if the Fed hikes rates later in the year, a distinct possibility.
FLOT: Still A Safe Harbour
I rate the iShares Floating Rate Bond ETF (FLOT) as a HOLD, favoring its high credit quality, low risk, and yield premium over T-bills for short-term cash parking. FLOT's assets are, in the main, FRNs issued by AAA Supranationals, or AA and A-rated commercial banks. The chances of credit losses are remote. FLOT's returns have outpaced CPI and will likely continue to do so. Its assets' credit spread are a buffer when rates rise, and a source of outperformance when rates fall.
FLOT: One Of My Favourite Low Duration Instruments
I am bullish on the iShares Floating Rate Bond ETF due to its attractive risk/reward profile in the current rate environment. FLOT offers low duration exposure, mitigating interest rate risk while providing competitive yields compared to liquid cash products and similar short-duration bond ETFs. The ETF's portfolio composition and floating rate structure position it well for regular income with minimal volatility.
FLOT: Why We Sometimes Need Boring Income
FLOT: Why We Sometimes Need Boring Income
FLOT: Holding Due Carry Down
The iShares Floating Rate Bond ETF offers a cash-plus solution for liquidity, focusing on high-quality, short-maturity floating rate bonds. FLOT's portfolio is heavily weighted towards investment-grade, quasi-government, and supranational issuers, resulting in low credit and interest rate risk. Currently, FLOT's risk/reward profile is unattractive due to compressed credit spreads and the prospect of falling short-term rates reducing future returns.
World Investment Advisors Sells 5,585 Shares of iShares Floating Rate Bond ETF $FLOT
World Investment Advisors trimmed its holdings in iShares Floating Rate Bond ETF (BATS: FLOT) by 39.1% in the second quarter, according to the company in its most recent Form 13F filing with the Securities and Exchange Commission. The institutional investor owned 8,716 shares of the company's stock after selling 5,585 shares during the
Cullen Frost Bankers Inc. Acquires 963 Shares of iShares Floating Rate Bond ETF $FLOT
Cullen Frost Bankers Inc. lifted its holdings in shares of iShares Floating Rate Bond ETF (BATS: FLOT) by 27.9% in the second quarter, according to its most recent filing with the SEC. The firm owned 4,418 shares of the company's stock after acquiring an additional 963 shares during the period. Cullen Frost Bankers
FLOT: An Alternative Place To Park Funds
FLOT offers a low-interest rate and credit risk profile, with a 5.15% yield, making it ideal for parking extra cash temporarily. The ETF invests mainly in high-quality, short-term floating-rate notes from supranationals and major banks, minimizing risk while boosting yield. Liquidity is excellent, costs are reasonable at 0.15%, and capital value remains stable, with minimal price volatility outside monthly dividends.
FLOT: Cash-Like Exposure, But NEAR And MINT Might Be Better
FLOT tracks the Bloomberg US Floating Rate Note < 5 Years Index, focusing on USD-denominated, investment-grade floating rate bonds. The ETF employs an indexing strategy, aiming to match index performance while minimizing costs and portfolio turnover. With a low 0.15% expense ratio, FLOT effectively tracks its benchmark, even outperforming expectations after fees.
FLOT: No Duration, But Still A Dollar Bet
FLOT offers zero-duration, low credit risk exposure, making it a defensive choice when rate and duration risks are elevated. However, it is USD denominated which is an enhanced consideration currently. Current geopolitical tensions, especially around Iran and the Strait of Hormuz, could support the US dollar if the US demonstrates commitment to the maritime order countering perceived isolationism. Rising oil prices from the conflict are likely to delay rate cuts, supporting USD yields and nominally increasing the attractiveness of the USD, reducing the USD risk.
ETFs to Make the Most of the Long-Term Yield Surge to 5%
A rise in yields is likely to benefit a few corners of the market. Investors seeking to capitalize on the opportune moment should consider these ETFs.
FLOT: Floating Through Volatile Markets
FLOT offers a conservative risk/reward profile with a 4.77% 30-day SEC yield and investment-grade exposure. Its short duration of 0.02 years and exposure to highly liquid, investment-grade corporate bonds make it a better risk management tool than T-Bills. The ETF benefits from rising interest rates, with significant exposure to multilateral development banks, reducing credit risk and enhancing liquidity.
ETFs Set to Benefit From Rising Yields
A rise in Treasury yields is likely to benefit a few corners of the stock and bond market.
FLOT: The Party Is Over (Rating Downgrade)
FLOT's floating rate bonds excel in rising interest rate environments but underperform in easing conditions, prompting a shift from 'Buy' to 'Hold'. The ETF's higher default risk and tight credit spreads make it less appealing compared to short-term bond funds like TBUX. FLOT offers a low 30-day SEC yield of 5.15%, with minimal spread over treasuries and short-term bond funds, reducing its attractiveness.
Weather Rate Volatility With FLOT
iShares Floating Rate Bond ETF is nice to avoid duration risk while benefiting from higher short-term yields amid volatile interest rates. Inflation declines are helped by lower oil prices, and sustained rate cuts are less likely in our view due to ongoing price increases by companies. We think the main chance for victory in the inflation battle is if the slightly lower oil and gas prices shift expectations, which are a persistent anchor above target rates.
FLOT: A Safe Harbour
The iShares Floating Rate Bond ETF is a low Beta, high quality, liquid ETF suitable for most short-term investors. It is designed to preserve wealth, not build it. The high-quality FRNs that FLOT invests in earn a premium yield to T-Bills, despite the fact that they are of similar credit quality. FLOT should continue to outperform money market instruments because the spreads it is locking in today will likely exceed the spreads on offer in a few years' time.
FLOT: Benign Credit Markets Suggest Investors Should Stay Invested
The FLOT ETF provides exposure to floating rate investment-grade bonds. The FLOT ETF has delivered a respectable 8.8% total return since April 2023 with a 5.9% yield. Revisiting my credit investment outlook, I believe following objective indicators like high-yield credit spreads may allow investors to stay invested for longer.
Floating Rate Bond ETF (FLOT) Hits New 52-Week High
For investors seeking momentum, iShares Floating Rate Bond ETF FLOT is probably on the radar. The fund just hit a 52-week high and is up 1.3% from its 52-week low price of $50.45/share.
FLOT: No Rate Cuts In 2024 Favor This Fund (Rating Upgrade)
The iShares Floating Rate Bond ETF has continued to deliver a strong performance in a "higher for longer" interest rate environment. The market's expectations for rate cuts have shifted, with the Fed now acknowledging a stronger economy and stickier inflation. FLOT offers a low-risk investment option with a high yield and has outperformed treasuries in the past year, generating a 7%+ total return on a 1-year look-back.