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Floating-Rate Bonds

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Keeping Up With Rising Rates

With the fed funds rate still at historic lows (0% - 0.25%) and the US economy showing signs of a recovery, talk that the Federal Reserve may taper its bond purchases has many investors planning their next move.[1] With the yield on the 10-year US Treasury note in reaching its highest level in 14 months in August 2013, long-term fixed-rate bonds might depreciate in value should interest rates continue higher. However, floating-rate securities are designed to maintain more of their value in that scenario, given that coupon payments are reset frequently to reflect more closely the changing interest-rate environment. Additionally, the ETFs in this motif hold shorter-maturity floating-rate bonds, in an effort to further distance interest rate risk for investors. This portfolio provides exposure to ETFs that hold investment-grade floating-rate notes and secured institutional banks loans offering high yields. See more
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Motif Index 1 YR Return
Floating-Rate Bonds Benchmark
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Weight Segment & Stocks Symbol 1 MO / 1 YR Return
20.1% High Yield --
20.1% Government 1.7%
20.1% Broad 2.2%
20.1% iShares Floating Rate Bond ETF FLOT 2.2%
20.1% Corporate 2.2%
20.1% 8xxxxx 8xxxxxx 8xxxxxxxxx 8xxxx 8xxxxxxx 8xxx 88.8%
19.6% Preferred --
19.6% 8xxxxxx 8xxxxxxx 8xxx 8xxxxxxxx 8xx 8xx --

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