We mention some evident position trimming lately in FLOT (iShares Floating Rate Bond, Expense Ratio 0.20%) in our Fund Flows recap in our morning note today, and this presents an opportunity to revisit a fund we have not covered in some time.
FLOT debuted in June of 2011, and has impressively raised north of $3.7 billion in assets under management in spite of recent redemption flows in the fund. FLOT hones in on Short-Term bonds with maturities of greater than or equal to one month and less than five years, and more specifically the fund invests in Floating Rate Bonds.
This is a relatively new corner of the Fixed Income ETF market, and FLOT has a commanding market share at the moment here with its current asset level.
The other two funds in the space are FLRN (SPDR Barclays Capital Investment Grade Floating Rate, Expense Ratio 0.15%) and FLTR (Market Vectors Investment Grade Floating Rate, Expense Ratio 0.14%) which have considerably lower asset levels ($393 million and $92 million respectively) than FLOT at the moment.
When we look at what is inside FLOT in greater detail, we see four hundred nine individual bond positions, with top weightings in debt issued by the likes of JPM, GS, and VZ to name a few of the companies.
Even the top holding in the fund which is a floating rate bond issued by JPM only has a 1.12% weighting, showing us that the portfolio is not top heavy any individual bond. In fact, only 8.5% of the total fund assets reside across the top ten holdings in the underlying index, which undoubtedly provides appeal to those looking for broad bond diversification.