Looking ahead, concerns about economic impact and inflationary pressures create a complex path for interest rates. Those investors looking for strategies that adapt to a changing rate environment would do well to consider the Eaton Vance Floating-Rate ETF (EVLN).
For many experienced fixed income investors, the barbell strategy is often used to set one's portfolio up for balanced success. The barbell strategy itself is fairly straightforward.
While some investors remain fixated on high yield bonds, treasuries, and even munis, they may be missing out on opportunities that bank loans are currently offering. Recent insights from Eaton Vance broke down the strong investment case supporting both bank loans and CLOs.
Investors have spoken loud and clear — floating-rate loan investing presents an attractive opportunity for yield. At the very least, they certainly have spoken in support of the Eaton Vance Floating-Rate ETF (EVLN).
EVLN's floating-rate securities offer relatively high current yields but face risks from potential rate declines, limiting future returns and effective duration benefits. The ETF's 0.60% expense ratio is higher than larger funds like FLOT, which offer similar returns with lower costs. Alternatives like EFR provide better exposure to international bonds and currencies, potentially outperforming in a weakening dollar environment.
Heading into the end of 2024, investors should be assessing which investment vehicles can offer them the strongest potential yield. Right now, bank loans and collateralized loan obligations (CLOs) can offer competitive yield for investors.