Wealth managers turn to floating rate funds to dodge yield spikes

Wealth managers have been adding floating rate funds to portfolios as they seek more flexible alternatives to short duration bond offerings.

Fears of rising bond yields have led many wealth managers to move in to short duration bond funds, and product providers have responded with a raft of new vehicles in the space. But some have found the fast-growing floating rate loan sector a more attractive way of mitigating rate risk as well as providing a healthy level of yield for portfolios. “With the leveraged loan market offering yields in the region of 4%-6%, this area of investing is attracting investors away from more conventional parts of the bond space where yields have been depressed, such as investment grade credit,” sai...