|Bid||0.00 x 800|
|Ask||0.00 x 1800|
|Day's Range||50.96 - 50.99|
|52 Week Range||50.79 - 51.10|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.20%|
In times of market trouble, investors look for ways to limit their exposure while not foregoing returns entirely. While one could choose plain cash, the real rate of cash is negative; with inflation chipping away at value, a cash holding actually declines in value over time.
One of the hottest areas of the fixed income space this year is floating rate notes (FRNs), a theme benefiting exchange traded funds such as the iShares Floating Rate Bond ETF (CBOE: FLOT) . 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.
After a two-day monetary policy meeting, the Federal Reserve's Federal Open Market Committee decided to keep interest rates unchanged on Wednesday. With the Fed's vote of confidence in the economy, the prospect for more rate hikes to come through the rest of 2018 is almost certain. The Fed stated that the labor market has "continued to strengthen," fortified by evidence of data regarding private payrolls, which increased in July by 219,000 versus an expected 185,000.
With fixed income investors looking for strategies that reduce duration risk, floating rate notes (FRNs) and the relevant ETFs are receiving renewed attention this year. That includes the iShares Floating ...
In a recent interview with CNBC, U.S. President Donald Trump unsurprisingly made his discontent known, saying he's "not happy" about the Federal Reserve's latest monetary policy moves to raise interest rates. President Trump's comments also stem from concern that a rising dollar in conjunction with rising rates will discourage investment from abroad. Looking at the U.S. Dollar Index Chart, the greenback has been gaining strength, particularly within the past few months where it has ticked above its 50-day simple moving average. While rising rates may not conjure up thoughts of excitement for President Trump, fixed-income investors allocating their capital into ETFs that feature a floating rate component are rejoicing.
IShares Floating Rate Bond ETF FLOT is a solid option for investors worried about rising interest rates and credit risk. This low-fee fund invests in investment-grade corporate bonds whose interest payments grow as rates rise. The fund tracks the Bloomberg Barclays U.S. Floating Rate Note
The latest U.S. economic data revealed by the Department of Commerce showed an increase in retail sales in June, signaling that continued growth could make way for more interest rate hikes to come before the end of 2018. Furthermore, retail sales have climbed steadily the last five years, almost touching the 2% mark in the tail end of 2017. Furthermore, continued growth came as a result of a 0.4% increase in auto sales during the month of June following a 1.4% increase in May.
As chief investment officer of Sierra Investment Management, Terri Spath sometimes finds herself playing the role of grief counselor when talking to clients about bonds. Indeed, investors can’t be blamed for wondering whether it’s worth investing in bonds at all, now that they’re finding negative returns across the market: Investment-grade corporate bonds are down 4.9% this year, including interest payments, which puts them on track for their worst calendar-year performance since 1974, according to Bank of America Merrill Lynch. Overall, global bonds are on pace for annualized losses of 3.5%, the weakest performance this century, says Merrill.
When it comes to fixed income investing, investors may seek long-term bonds to extract its benefits of higher returns in lieu of additional risk, but in market times like today where trade concerns continue to roil the markets and interest rate spikes lie ahead, a short-term strategy in conjunction with a floating rate component could be the ticket to solid returns as in the case of the iShares Floating Rate Bond ETF (FLOT) . FLOT seeks to track the investment results of the Bloomberg Barclays US Floating Rate Note
Even if you have been an investor for 30 years, you don't really know about high interest rates. U.S. interest rates peaked in October 1981, when the 30-year Treasury bond traded at 15%. The dream, when I started investing later that decade, was of "hat-sized yields" of 6%-7%, which didn't become the norm until the early 1990s. Today, interest rates are less than half that. Early in 2018, the rate on the 30-year Treasury stood around 2.7%. By mid-February, the yield on that long-term debt had spiked about 15% to around 3.1%, which is roughly where it trades today. Investors panicked at the time, and higher interest rates still have investors worried. For good reason. After all, higher interest rates make bonds more competitive with some dividend stocks, and perhaps more importantly, they make borrowing more expensive for corporations, eating into the bottom line. The Federal Reserve has already raised its benchmark rate once this year, is about to do so a second time and is expected to hike interest rates once or even twice more before 2018. Your portfolio could well feel the shockwaves from these actions - though you can minimize the damage by taking a few actions. Here are six techniques suggested by money managers. SEE ALSO: 45 Smart Financial Moves You Can Make in an Hour or Less
SOKOL: You have laid out a good case to consider both emerging markets local currency bonds as well as floating rate investment grade debt. These seem, in many ways, at opposite ends of the spectrum from a risk perspective. So how could investors use these strategies to position their portfolios in this market?
Investors poured into fixed income ETFs in April as equity market volatility jumped with several month’s leading asset-gathering ETFs being bond funds. For example, the iShares Short Treasury Bond ETF ...
The equity market has be shaken by a sudden bout of volatility, sending investors out of riskier assets and into safer plays. The shift in investment sentiment has been a huge boon for bond exchange traded ...
In fact, April was a great month for bond ETFs on multiple fronts. Last month, BlackRock, Inc. ( BLK), the parent company of iShares, the world's largest ETF issuer, said that combined assets under management for bond ETFs listed around the world eclipsed $800 billion. Entering the final trading day of last month, "U.S.-listed bond ETF flows have attracted $14.7 billion so far in April, on track for [the] biggest month of net inflows since October 2014 (October 2014 had inflows of $17.3 billion)," said Steve Laipply, head of U.S. iShares fixed income strategy at BlackRock.
Now that trade war concerns appear to have eased somewhat, decent Q1 earnings have started hitting the market and some upbeat economic readings are coming up, long-term U.S. treasury yields have started soaring. Yields on 10-year Treasury notes crossed the 2.9% mark on Apr 19, marking the one-month high.Source: ©iStock.com/Osuleo
Options for ETFs that hold short-term Treasury bills and floating rate investment-grade bonds as well as other strategies.
E*TRADE Financial Corporation today announced a significant expansion of its commission-free exchange-traded fund lineup, all of which are non-proprietary:
Bond funds took in about $201.9 billion in net new money in the first nine months of this year. That's 64% more than in the same period for 2016.
Investors looking for an alternative to traditional cash instruments can consider floating rate bonds and the related exchange traded funds. The Federal Reserve has boosted borrowing costs twice this year ...