FLRT
Pacer Pacific Asset Floating Rate High Income ETF
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FAZ - down 20% over 1 year, down 87% over 5 years CLOZ - down 5% over 1 year, up 1% over 5 years FNGD - down 60% over 1 year, down 99% over 5 years FLRT - down 2.5% over 1 year, down 5% over 5 years looks like some red flags to me
your comparison off your comparing Bank Loans to Equity CLO's you need to be using DEBT Clo's like PAAA or CLOZ or JAAA or JBBB to BKLN and SRLN(or FLRT or FLBL)
After doing some more research I liked your suggestions the best. I'm not on fixed income so I can take the higher risk for better reward than the 4.99% I'm getting in the swept cash. I'm learning more towards CDX than BINC. FLRT looked okay too but I asked AI to assume there would be both a moderate interest rate decline in the next 18 months and a modest pullback in the stock market. This was the response. 1. Bond performance in declining markets: Generally, bonds tend to perform better when stock markets are declining, as investors often shift to safer assets. CDX, being an ETF that tracks investment-grade corporate bonds issued by S&P 500 companies, is better positioned to benefit from this trend. 2. Interest rate sensitivity: As interest rates gradually lower, bond prices typically rise. This is especially true for longer-duration bonds. While both ETFs contain bonds, CDX is likely to be more sensitive to interest rate changes due to its focus on corporate bonds, which often have longer durations than senior loans. 3. Credit quality: CDX holds investment-grade corporate bonds, which are generally considered safer than the senior loans that FLRT focuses on. In a slowing economy, higher-quality bonds tend to outperform riskier debt instruments. 4. Market correlation: FLRT, as a senior loan ETF, may have a higher correlation with the stock market compared to CDX. This means FLRT might be more negatively affected by the slightly declining stock market scenario. 5. Historical performance: While past performance doesn't guarantee future results, bond ETFs have historically performed well in environments similar to the one described.
Looking at the long term chart for FLRT, the unit price has fluctuated between $50 and $41 over the past 5 years with the biggest drop in March 2020 but also a drop from $49 to $44 over 2022. So there are definitely significant (20%) fluctuations in the share price. Looking at a chart of credit spreads (difference between the interest rate on US government debt and corporate debt) shows an unsurprising correlation - during times of financial stress when the risk of default on debt rises, the value of debt with lower credit rating falls relative to US government debt. During the 2008 financial crisis credit spreads were twice what they were in 2020 so the unit price would drop much further. Someone more knowledgeable than myself could possibly do the math - I would guess a drop of 40%? In the event of bankruptcies and defaults, the unit price could be permanently impaired as some of the holdings would be written off. So it's a typical risk-reward trade off. To me, the biggest drawback is that a loss on this ETF is going to be correlated with a general drop in the market and economy so most of your other investments will also be down at the same time and your risk of unemployment may also be elevated at that time.
Well comparing lifetime returns to current HYSA yields seems misleading as rates in 2015 were obviously much different than they are now, and HYSA returns were lower over that span as well. I’m speaking specifically on the recent yields which are based on current rates. I would be interested to see a comparison between DRIPing FLRT vs a HYSA during that time. A good point about the price action in a black swan event like 2020, but I’m still curious what the actual driving factors are for the share price
It looks like most of those invest in floating rate corporate bonds So from my understanding floating rate bonds have less interest rate risk vs fixed rate. If rates go up well usually the interest on the bonds also go up eliminating some of the interest rate risk However this is also somewhat of a draw back as rates go down well the rate of these bonds will go down and you may not get the appreciation you would with a fixed rate bond However these seem to invest in high yeild corporate debt , FLRT holds about 80% non-investment grade high yeild debt (Also known as junk bonds) Now Junk bonds get a bit of a bad name, they hold more risk then investment grade bonds (or goverment bonds) but defaults are still somewhat rare but do or can happen So the biggest risk is default risk , the issuer of the bond cannot repay it what is why it yeilds much more then safe or garanteed debt like CDs , HYSA or goverment bonds To me you really do not want to put much risk your short term savings , not to say these will default but there is a risk. If you look at the chart in the covid panic these did drop , basiacally people were scarred covid would bankruipt the companies and they would be forced to default So I guess its really depends exactly how much risk you want to take in your savings (what probably should be not much at all) Now if you have excess savings and want to have some middle ground less risky then stocks but more risky then goverment bonds this may be a reasonable investment to get approx 7-8% returns
BRLN and PFRL have only existed since 2023. I'm not sure they've ever been stress-tested. Putting your emergency fund into a security, and at that, a security that has existed for less than 2 years, seems quite risky for an emergency fund. FLRT has only existed since 2015, and has a lifetime 3.99%/year total return (including both price and yield), which is lower than the >5% can currently get with 3 month treasuries. Look at FLRT's price chart around 2020, when Covid hit. Notice how it fell from ~$50 to ~$38 in the span of a few months. Losing >20% of your investment's value during an economic crisis, at the exact time when you're most likely to need to use your emergency fund to pay the bills, seems like you're taking on the risk of having your emergency fund worth >20% less at the exact time you need it. You don't need to ask us if there's a risk of the share price plummeting, because public charts already show it did exactly that during Covid... so you already know it can happen. If the returns on BRLN and PFRL mirror FLRT, then not only are they not suitable for an emergency fund as they can crash during bad times when you're most likely to need them, but their total return is actually lower than 3-month treasury bills like the 5.26% on SGOV right now. So you're not even being paid for taking on that extra risk! Yes their yield is higher, but their total return over time is actually significantly lower, AND they're higher risk. There are savings accounts paying 4-5.5%. There are money market funds paying 5-5.5%. Getting >6% requires investing in a security that's likely to drop in value during a crisis, the exact time you need to sell it to cover emergency expenses. Getting only a 4-6% yield is the price you pay for ensuring your funds are safe and accessible in an emergency. If you want to try for a higher yield using floating rate loan ETFS you can... but you're taking on risk of not being able to get full value if you have to sell, not getting as high a total return as treasuries, AND having to pay higher taxes to boot. This isn't financial advice, this isn't investing advice, this isn't encouragement to buy or sell any security, this is simply how I'd run the calculation if I was in your shoes.
You dont have to invsest in growth stocks if you feel like the market to high invest in something like FTSL, FLBL, BKLN, FLRT, SRLN or SEIX
> That's what I was thinking too, I was just looking for a more aggressive strategy than Tbill and chill. You could invest in floating-rate corporate debt. JAAA, JBBB, BKLN, FLRT, FTSL, etc.
Can someone tell me what a EU or TC means at the end of a stick ticker? FLRT-EÛ has gone from +65,000 to -4500 in the last few days. Just trying to understand. Thanks.
what you're looking for is Floating-rate bonds. quick google search yields these 4 tickers. market value is stable since, well, it's duration neutral ​ iShares Floating Rate Note Fund (ticker: FLOT) Van Eck Market Vectors Investment Grade Floating Rate Bond ETF (ticker: FLTR) SPDR Barclays Capital Investment Grade Floating Rate ETF (FLRN) Pacific Asset Enhanced Floating Rate ETF (FLRT)