Wednesday, April 27, 2011

Market Vectors Investment Grade Floating Rate ETF Debuts

Ron Rowland submits:

A niche fixed-income market is opening wider with Tuesday?s listing of the Market Vectors Investment Grade Floating Rate ETF (FLTR). The product developers at Van Eck?s Market Vectors ETF shop have a keen sense of timing; obviously they think demand exists for something like FLTR. Now we will see if they have another hit on their hands.

The FLTR launch comes less than two months after that of the PowerShares Senior Loan Portfolio (BKLN) debut. Both specialize in ?floating rate? debt instruments. These are packaged bank loans with periodically resetting interest rates, usually tied to a benchmark like LIBOR. The reset feature means that floating-rate paper has very little exposure to the negative impact of rising interest rates. Returns are driven primarily by credit risk.

FLTR taps into the upper part of the floating-rate market by holding only debt rated at ?investment grade? or higher by one of the primary


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