The rub with gaining protection from rising rates is a low yield. For example, FLOT yields less than 1%, which is below what investors can find on 10-year Treasuries. Looking ahead, the floating rate notes will generate more interest if Treasury prices fall and yields rise further, which should play out if the Fed continues on its interest rate normalization schedule.
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“The low returns the fund has seen aren’t surprising given the low rate environment the fund has operated under. Those yields will rise as interest rates begin moving up but the low risk nature of the fund may be the more appealing aspect of this product,” adds Seeking Alpha.
Other floating rate note ETFs include the SPDR Barclays Investment Grade Floating Rate (NYSEArca: FLRN) and the iShares Treasury Floating Rate ETF (NYSEArca: TFLO).
iShares Floating Rate Bond ETF
