A fund that we have profiled here before since its inception in mid-2011 continues to impress in terms of its ability to raise assets, FLOT (iShares Floating Rate Bond, Expense Ratio 0.20%), as it has taken in $2.9 billion year to date boosting its total AUM above $3.3 billion.
Daily average trading volume has bloomed as well to north of 860,000 shares.
The fund is by far the largest in its niche category of Floating Rate Bond ETFs, where there are two other much smaller players FLRN (SPDR Barclays Capital Investment Grade Floating Rate, Expense Ratio 0.15%) and FLTR (Market Vectors Investment Grade Floating Rate, Expense Ratio 0.19%) with $335 million and $64 million in AUM respectively.
However these are respectable asset levels considering the longest tenured fund on the market in this space FLTR launched in April of 2011. [Floating-Rate ETF Hauls in Cash]
FLOT by design has exposure to “bonds whose coupon payments change based on prevailing short term interest rates (mainly financial issuers)”.
That verbiage is timely and important of course, amid the current scenario of interest rate volatility that prevails in the marketplace.
Top holdings within FLOT at the moment include issues from JP Morgan, Commonwealth Bank of Australia, Goldman Sachs, and General Electric Capital Corp. to name a few, and only 15% of the overall portfolio is invested across the top ten floating rate bond issues, giving the fund depth and diversification across a basket of bonds (nearly 300 in the portfolio).
Investors have clearly embraced exposure to Floating Rate Bonds via these newer ETF tools and based on the quick success that iShares, SPDRs, and Market Vectors have had in terms of raising assets here thus far, we would expect new entrants into this niche area of fixed income in time.
Perhaps some of the fund sponsors that are well known for their fixed income prowess the likes of Vanguard, PIMCO, Guggenheim, are eyeing up the possibilities of entry into this market.
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
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