What is a Senior floating-rate fund?

What is a Senior floating-rate fund?

(NYSE:AFT) is a closed-end fund that seeks current income and preservation of capital by investing primarily in senior, secured loans to companies rated below investment grade.

Are senior loans floating-rate?

Although loans can be structured as fixed or floating rate loans, senior loans are typically structured as floating rate loans, which means that the interest paid on these loans will move with interest rate fluctuations.

Are floating-rate funds a good investment now?

Closed-end funds that invest in floating-rate bank loans were a top pick for 2021. With the Federal Reserve set to raise short-term rates multiple times this year, these CEFs look good for 2022. This half dozen still trade at discounts and yield close to 6% and higher.

What are floating-rate debt funds?

A floating rate fund invests in bonds and debt instruments whose interest payments fluctuate with an underlying interest rate level. Floating rate funds can include corporate bonds as well as loans made by banks to companies. These loans are sometimes repackaged and included in a fund for investors.

Are senior loans risky?

Not Risk-Free In a nutshell, Senior loans are riskier than investment-grade corporate bonds but slightly less risky than high-yield bonds. It’s important to keep in mind that valuations in this market segment can change quickly.

When should I buy a floating-rate fund?

The best time to buy floating-rate bonds is when rates are low, or have fallen quickly in a short period, and are expected to rise. Conversely, traditional bonds are more attractive when prevailing rates are high and expected to fall.

Which Floater fund is best?

Best Floater Funds ranked by ET Money on performance consistency & downside protection

  • HDFC Floating Rate Debt Fund. N.A.
  • Franklin India Floating Rate Fund.
  • Nippon India Floating Rate Fund.
  • ICICI Prudential Floating Interest Fund.
  • UTI Floater Fund.
  • Aditya Birla Sun Life Floating Rate Fund.
  • Axis Floater Fund.
  • DSP Floater Fund.

Which is better floating rate or fixed rate?

Fixed versus floating interest rate Fixed rates are slightly higher than floating rates. Floating rates are slightly lower than fixed rates. If you are comfortable with the prevailing interest rates, are reasonably sure that interest rates will rise in future, opt for a fixed rate home loan.