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Sunday, April 8, 2012

Chasing Yield from Floating Loan Funds ?

With interest rates on conventional bonds touching rock bottom, you wouldn't be the only investor searching for yield wherever it can be found, like, say, from floating rate loan or bank loan funds.

What are these vehicles, and what are the risks and rewards of investing in them ?

Glad you asked.

Check out the articles cited below.

BTW, both Fidelity and T Rowe Price have open-end mutual fund offerings in this area,  the respective ticker symbols being FFHRX and PRFRX.

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Investopedia - 'Floating-Rate Mutual Funds: Rewards And Risks'

Vanguard - 'Promise of bank-loan funds tempered by credit risk'

Vanguard - 'A Primer on Floating Rate Funds'

Wall Street Journal - 'Are 'Floating-Rate Loan' Funds Still a Smart Move?'

Wall Street Journal -'How Much Will 'Floating Rate' Funds Really Float ?'

Forbes - 'Are Floating Rate Funds The Wrong Answer To Rising Rates?'

FINRA News Release - 'FINRA Warns Investors About Chasing Returns in Structured Products, High-Yield Bonds and Floating-Rate Loan Funds'

FINRA - 'The Grass Isn’t Always Greener—Chasing Return in a Challenging Investment Environment'

Seeking Alpha - Russell Bailyn - 'Floating Rate Bank Loans: An Asset Class Suited to This Environment'

Seeking Alpha -Michael Terry - 'Loan-Based Closed-End Funds: Current Income And Inflation Protection'

Seeking Alpha - Steve Bavaria - 'After Proving Themselves in the Crash, Loans Now Seen as 'Third Asset Class''