Van Eck Global, the tenth-largest U.S. issuer of exchange traded funds and the parent company of Market Vectors, today said it is lowering the annual fee on the Market Vectors Investment Grade Floating Rate Bond ETF (NYSEArca: FLTR).
Effective immediately, FLTR’s new annual expense ratio is 0.14%, down from 0.19%. Floating rate notes will generate more interest if Treasury prices fall and yields rise, a scenario some advisors and investors are betting on now that the Federal Reserve has ended quantitative easing. [Floating Rate Note ETFs Gain Fans]
FLTR tracks the Market Vectors US Investment Grade Floating Rate Index (MVFLTR), which 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, according to Market Vectors.
“We expect the reduced pricing will make FLTR a more attractive option for income investors looking to decrease interest rate sensitivity in their portfolios,” said FLTR’s manager Meredith Larson in a statement. “FLTR offers investors exposure to investment-grade floating rate notes (FRNs) and was recognized by Morningstar with a 5-star overall rating.”
FLTR, which debuted in April 2011, had $92.6 million in assets under management as of Nov. 4.
Floating rate notes, like the name suggests, have a floating interest rate. Specifically, the notes’ have a so-called reset period with interest rates tied to a benchmark, such as the Fed funds, LIBOR, prime rate or U.S. Treasury bill rate.
FLTR has a 30-day SEC yield of 0.43% and a modified duration of just 0.15 years.
Market Vectors Investment Grade Floating Rate Bond ETF
ETF Trends editorial team contributed to this post.
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