An ETF that has quietly raised more than $700 million in assets under management in less than two years and has seen an enormous uptick in trading activity in the past week or so is iShares Floating Rate Note Fund (NYSEArca: FLOT), expense ratio 0.20%.

This ETF tracks the Barclays Capital U.S. Floating Rate Note < 5 Years Index, and the portfolio methodology relies on purchasing investment grade floating rate notes, generally having maturities between one month and less than five years.

For instance, currently top holdings include corporate bonds issued by companies such as Wachovia Corp (New), Commonwealth Bank Australia, Goldman Sachs, JP Morgan, and BNP Paribas. FLOT typically averages about 263,000 shares on an average daily basis, but that number is certainly skewed by a handful of “very large volume” trading days that have occurred during the fund’s lifetime (debuted in June of 2011). [New Floating-Rate Note ETF]

For instance, just last week more than 2 million shares changed hands during one session alone. In the current investment environment, it is no surprise that interest has perked up in this product as portfolio managers have become cognizant of interest rate risk in their portfolios, and thus they are able to receive exposure to corporate bonds whom have “floating” coupon payments based on the prevailing market short term interest rates.

As the product issuer iShares notes, most of the corporate bonds held within the portfolio are financial based issuers. [How Rising Rates Would Impact Bond ETFs]

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