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For investors seeking momentum, VanEck Vectors Investment Grade Floating Rate ETF (FLTR - Free Report) is probably on radar now. The fund just hit a 52-week high and is up about 3% from its 52-week low price of $24.33/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
FLTR in Focus
This ETF tracks the MVIS U.S. Investment Grade Floating Rate Index which comprises mainly U.S. dollar denominated investment grade floating rate notes. As far as geographical concentration is concerned, the fund is heavy on the U.S. with about 62.23% focus followed by Japan (7.17%) and Australia (6.41%). It charges investors 14 basis points a year in fees (see all the Investment Grade Corporate Bond ETFs here).
Why the Move?
Floating rate notes are investment grade bonds that do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index (such as LIBOR) plus a variable spread depending on the credit risk of issuers.
Since the coupons of these bonds are adjusted periodically, these are less sensitive to an increase in rates compared to traditional bonds. Since the yields on the benchmark 10-year U.S. Treasury note are on the rise due to the Fed policy tightening, the reason behind the uptick in this floating rate bond ETF is self-explanatory.
More Gains Ahead?
It seems that FLTR might continue with its strength given a positive weighted alpha of 1.90. Since a positive weighted alpha hints at more gains, there is definitely still some promise for investors who want to ride this surging ETF a little further.
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Floating Rate ETF (FLTR) Hits New 52-Week High
For investors seeking momentum, VanEck Vectors Investment Grade Floating Rate ETF (FLTR - Free Report) is probably on radar now. The fund just hit a 52-week high and is up about 3% from its 52-week low price of $24.33/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
FLTR in Focus
This ETF tracks the MVIS U.S. Investment Grade Floating Rate Index which comprises mainly U.S. dollar denominated investment grade floating rate notes. As far as geographical concentration is concerned, the fund is heavy on the U.S. with about 62.23% focus followed by Japan (7.17%) and Australia (6.41%). It charges investors 14 basis points a year in fees (see all the Investment Grade Corporate Bond ETFs here).
Why the Move?
Floating rate notes are investment grade bonds that do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index (such as LIBOR) plus a variable spread depending on the credit risk of issuers.
Since the coupons of these bonds are adjusted periodically, these are less sensitive to an increase in rates compared to traditional bonds. Since the yields on the benchmark 10-year U.S. Treasury note are on the rise due to the Fed policy tightening, the reason behind the uptick in this floating rate bond ETF is self-explanatory.
More Gains Ahead?
It seems that FLTR might continue with its strength given a positive weighted alpha of 1.90. Since a positive weighted alpha hints at more gains, there is definitely still some promise for investors who want to ride this surging ETF a little further.
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>