First Fed Rate Hike Since 2023, Upbeat GDP Forecast: ETFs to Gain
The Fed's rate hike and stronger GDP outlook could benefit dollar, small-cap and floating-rate ETFs while supporting cash-like assets.
3 Floating Rate ETFs to Try as Interest Rates Set to Rise
The Fed is having its latest meeting this week, amid growing concern over yields and inflation. The two day session is widely expected to include the Federal Reserve raising rates at least somewhat to try to assuage markets.
FLOT: It's The Perfect Time For Floaters, In My View
Real rates are firmly positive at the short-end and I can't see that changing anytime soon. I think FLOT presents cost-effective exposure to floaters, allowing portfolios to set-up a barbell alongside duration. I also deem equity valuations high and don't think it's a bad time for a cash plus vehicle such as FLOT.
Fed Holds Rates Steady, May Hike Ahead: ETFs in Focus
The Fed held rates steady but a September hike is gaining traction as inflation risks persist. Here are the ETFs that could benefit.
FLOT: Simple Quality Floating Rate Bond, One Step Above T-Bills On Risk-Return
High-quality floating rate bonds have broadly similar characteristics to t-bills, with slightly higher yield, risk and volatility. FLOT is a simple index ETF investing in these securities, with a 4.0% SEC yield. Income could grow if the Fed hikes rates later in the year, a distinct possibility.
FLOT: Still A Safe Harbour
I rate the iShares Floating Rate Bond ETF (FLOT) as a HOLD, favoring its high credit quality, low risk, and yield premium over T-bills for short-term cash parking. FLOT's assets are, in the main, FRNs issued by AAA Supranationals, or AA and A-rated commercial banks. The chances of credit losses are remote. FLOT's returns have outpaced CPI and will likely continue to do so. Its assets' credit spread are a buffer when rates rise, and a source of outperformance when rates fall.
FLOT: One Of My Favourite Low Duration Instruments
I am bullish on the iShares Floating Rate Bond ETF due to its attractive risk/reward profile in the current rate environment. FLOT offers low duration exposure, mitigating interest rate risk while providing competitive yields compared to liquid cash products and similar short-duration bond ETFs. The ETF's portfolio composition and floating rate structure position it well for regular income with minimal volatility.
FLOT: Why We Sometimes Need Boring Income
FLOT: Why We Sometimes Need Boring Income
FLOT: No Duration, But Still A Dollar Bet
FLOT offers zero-duration, low credit risk exposure, making it a defensive choice when rate and duration risks are elevated. However, it is USD denominated which is an enhanced consideration currently. Current geopolitical tensions, especially around Iran and the Strait of Hormuz, could support the US dollar if the US demonstrates commitment to the maritime order countering perceived isolationism. Rising oil prices from the conflict are likely to delay rate cuts, supporting USD yields and nominally increasing the attractiveness of the USD, reducing the USD risk.
ETFs to Make the Most of the Long-Term Yield Surge to 5%
A rise in yields is likely to benefit a few corners of the market. Investors seeking to capitalize on the opportune moment should consider these ETFs.
FLOT: Floating Through Volatile Markets
FLOT offers a conservative risk/reward profile with a 4.77% 30-day SEC yield and investment-grade exposure. Its short duration of 0.02 years and exposure to highly liquid, investment-grade corporate bonds make it a better risk management tool than T-Bills. The ETF benefits from rising interest rates, with significant exposure to multilateral development banks, reducing credit risk and enhancing liquidity.
ETFs Set to Benefit From Rising Yields
A rise in Treasury yields is likely to benefit a few corners of the stock and bond market.
