The theory behind floating-rate funds is sound. Unlike fixed-rate bonds, whose prices fall when interest rates rise, "floating" rates move in tandem with Libor or the Federal funds rate, reducing the impact of rising rates.
It's hard to assess the performance of these ETFs, since the most venerable of them is just two years old. But the Credit Suisse Leveraged Loan Index gives an encouraging hint. Since its inception in 1992, the floating-rate loan index outperformed fixed-income benchmarks by 4.3% in the three periods in which the Federal Reserve increased interest rates, according to a Vanguard study.
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|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.36%||4.24%|
|15 yr fixed||3.39%||3.26%|
|30 yr refi||4.34%||4.22%|
|15 yr refi||3.38%||3.24%|
Today's featured rates: