Investors are caught in the midst of a raging bull market that was even more evident in the Department of Commerce showing that gross domestic product grew by a revised 4.2% in the second quarter, giving the Federal Reserve more fodder to raise rates this month. With rate hikes on the horizon, fixed-income investors must be able to counter effectively and one way is through an ETF that invests in floating rate notes, such as the VanEck Vectors Investment Grd Fl Rt ETF (NYSEArca: FLTR).
With two rate hikes already experienced through the first two quarters of 2018 and the prevailing sentiment circulating within the capital markets that more is to come, bond investors can incorporate fixed-income ETFs into their portfolios that can adjust with rising rates. This floating rate component gives investors adaptability in the current economic environs where rising rates are prevalent by taking advantage of these short-term rate adjustments rather than earning a fixed return.
“The bottom line is that the economy remains on a solid growth path and still appears to have the potential to remain on a positive track for some time to come,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.