BlackRock launches floating rate bond ETF

BlackRock has added a floating rate bond fund to its fixed income ETF range.

The iShares $ Floating Rate Bond Ucits ETF (FLOT) holds dollar-denominated floating rate bonds which offer flexible coupons that are adjusted in line with interest rates.

The index comprises bonds that are at least investment grade with a maximum maturity of five years, which the fund physically replicates. The total expense ratio is 0.1 per cent.

Brett Pybus, head of iShares EMEA fixed income strategy at BlackRock, says: “Concerns about rising rates have prompted many investors to consider moving out of longer-duration bonds. This fund provides investors with a way to reduce duration and protect portfolios against periods of rising interest rates with exposure to short-dated, high quality floating rate credit denominated in US dollars, and offers an attractive yield compared with money market funds.

“Our focus continues to be on developing a broad and granular range of ETFs that help investors build precise and cost efficient portfolios, and this fund is testament to that.”