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Are Bank-Loan Funds Ready To Be Loved Again?
Great summary, Tim. Given where high yield pricing is currently (hy bond funds yielding around 7%) and how low overall interest rates are (US treasuries around 1.6-1.7%) investing in floating rate notes makes a ton of sense. Rates aren't expected to rise anytime soon but given their record lows, high duration assets will get crushed when the pendulum turns. I invest in Invesco's floating rate fund (
) and am earning a yield of around 6.3% annually. So I pay approximately 70 bps for rising rate protection.
High yield still has its place in today's portfolios but given record low rates, minimal yield loss, extremely low duration and wonderful diversification benefits, these bank loan funds have an essential place in today's portfolios! Thank you for the other fund suggestions.
Oct 11, 2012. 09:09 AM
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