What are floating-rate notes and why do funds invest in them?

Floating-rate notes are debt securities with variable coupon payments, typically linked to a benchmark interest rate. Unlike fixed-rate bonds, where yields remain constant, floating-rate notes adjust with interest rate changes. Funds like FLOT and FLTR invest in these instruments to offer some protection against rising interest rates. If rates rise, the coupon payments on the underlying notes generally increase, potentially helping to stabilise the fund's income stream and reduce the price volatility often associated with fixed-income assets when rates move upward.

What does 'investment-grade' mean in the context of these ETFs?

Investment-grade refers to credit ratings assigned by agencies like Moody's or S&P, indicating a lower risk of default by the issuer. These ratings typically range from AAA down to BBB-. The VanEck fund's name includes 'IG' for investment grade. While FLOT is described as a floating rate note ETF, both funds operate within similar credit-quality parameters. Investing in investment-grade bonds generally prioritises capital preservation and stable income over the higher potential yields associated with lower-rated, speculative-grade or 'junk' bonds.

How does an ETF differ from a traditional mutual fund?

Exchange-Traded Funds (ETFs), like FLOT and FLTR, are pooled investment vehicles that hold a basket of securities, such as floating-rate notes. A key difference is that ETFs trade on stock exchanges throughout the day, similar to shares. This allows investors to buy or sell them at current market prices. Traditional mutual funds are bought and sold directly with the fund manager at the end of the trading day based on the net asset value (NAV). ETFs often provide greater intraday liquidity and may have different fee structures compared to mutual funds.

How do the expense ratios of FLOT and FLTR compare?

The expense ratio is an annual fee covering fund management costs. According to the provided data, the iShares FLOT fund has an expense ratio of 0.15%. The VanEck FLTR fund has an expense ratio of 0.14%. This means FLTR charges 0.01 percentage points less annually. While seemingly small, expense ratios are deducted from a fund's assets, so lower fees can theoretically allow for slightly higher net returns over extended holding periods, all else being equal. These fees are taken daily, not at the end of the year.

How do the dividend yields of FLOT and FLTR compare?

Dividend yield indicates the annual income relative to the price. Based on the provided figures, FLTR offers a dividend yield of 4.49%. FLOT offers a yield of 4.34%. FLTR has a slightly higher current yield, about 0.15 percentage points more. This difference might reflect variations in the underlying securities held or current pricing. Investors should remember that yield is not guaranteed and can fluctuate based on interest rate changes affecting the coupons of the underlying floating-rate notes, as well as the fund's net asset value.

Do FLOT and FLTR hold the same top 10 securities?

According to the fund data provided, there are no shared top-10 holdings among the listed top holdings for FLOT and FLTR. This suggests the specific securities or weightings chosen by each issuer differ. However, for both funds, 'Top holdings: not available' is listed in the ground truth data, and 'Specific sector weightings and top holdings are currently not available' is noted in the cons. Therefore, while we know the explicitly listed top holdings do not overlap, a complete comparison of their underlying portfolios is not possible with the data provided.

Which investing goals are these funds typically associated with?

FLOT and FLTR, as Ultrashort Bond ETFs investing in floating-rate notes, are typically associated with goals focused on capital preservation and generating stable income. They may appeal to investors concerned about rising interest rates, as floating coupons can adjust. The variable coupons can help stabilise income relative to fixed-rate bonds. However, 'Ultrashort Bond' categorisation implies relatively low duration risk compared to longer-term bond funds. Neither fund is designed for significant capital appreciation or aggressive growth; the primary objectives generally revolve around the aforementioned income and rate-hedge characteristics.

How might rising interest rates affect floating-rate ETFs like FLOT and FLTR?

Rising interest rates can impact floating-rate note ETFs differently than fixed-rate bond funds. Because the coupons adjust upwards with benchmark rates, rising rates can increase the fund's income stream. This feature provides some natural protection against interest rate risk, potentially mitigating price declines. However, if rates rise rapidly, it could lead to increased volatility as investors reassess the value of these securities compared to newly issued fixed-rate debt offering higher yields, or cause broader shifts in investor demand.

How do credit ratings impact floating-rate note ETFs?

Credit ratings assess the default risk of the issuers of the notes held within funds like FLOT and FLTR. Higher-rated (investment-grade) issuers are considered less risky but may offer lower yields. If an issuer's rating is downgraded, it increases perceived default risk, which could lead to a decline in the market price of the note and consequently impact the fund's net asset value. Funds focused on investment-grade floating-rate notes, like FLTR which specifies this, typically aim to mitigate this specific risk relative to funds holding lower-rated debt.

What does 'Ultrashort Bond' mean for interest rate sensitivity?

'Ultrashort Bond' generally refers to fixed-income securities with very short maturities, often less than two years. This classification implies lower duration risk compared to longer-term bond funds. Duration measures sensitivity to interest rate changes; lower duration means the fund's price should theoretically be less volatile when rates fluctuate. The floating-rate nature of the underlying assets further modifies this, as interest income adjusts with rates. For FLOT and FLTR, being categorised as ultrashort suggests an inherent design to limit price declines during rate increases, although floating mechanisms are the primary differentiator here.

What is the difference in assets under management (AUM) between FLOT and FLTR?

Assets under management (AUM) reflects the total market value of all assets held by the fund. FLOT has significantly larger AUM, at $10.9 billion, compared to FLTR's $3.3 billion. This means FLOT is over three times larger. While not directly impacting an investor's potential returns, a larger fund often has higher liquidity (easier to buy/sell) and can be more efficient in spreading operating costs, although FLTR has a marginally lower stated expense ratio. Neither figure indicates fund performance.

Why is information like 'top holdings' or 'index tracked' sometimes 'not available' for ETFs like FLOT and FLTR?

Providing detailed, real-time data like top holdings or specific index tracking methodologies can be complex and costly. Fund issuers may only publish these details periodically (e.g., quarterly) or upon request, and some may not publish certain proprietary aspects. The ground truth data for both FLOT and FLTR lists 'Index tracked: not available', 'Top holdings: not available', and 'Sector weights: not available'. This limitation means investors might have to rely on other fund documents, like prospectuses or factsheets, or accept that full portfolio transparency is not accessible from this specific dataset, affecting comparisons based on detailed asset composition.

FLOT vs FLTR

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

Compare the iShares Floating Rate Note ETF (FLOT) and the VanEck IG Floating Rate ETF (FLTR). This page reviews fees, holdings, dividends and how each fund tracks its market. FLOT charges 0.15%, while FLTR charges 0.14%. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

FLOT

Metric

FLTR

0.15%

Expense Ratio

0.14%

4.34%

Dividend Yield

4.49%

$10.93B

Net Assets

$3.26B

556

Holdings

458

Jun 14, 2011

Inception Date

Apr 25, 2011

–

Index Tracked

–

Ultrashort Bond

Fund Category

Ultrashort Bond

FLTR costs about $1.00 less per year for every $10,000 invested.

Shared Top Holdings

These funds do not share any of their top holdings.

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FLOT vs TFLO

Compare iShares ETFs FLOT and TFLO on fees, holdings, dividends, and tracking. FLOT yields 4.34%, TFLO 3.74%. Index and holdings are not available.

FLRN vs FLTR

Compare FLRN and FLTR ETFs. Review expense ratios, dividend yields, net assets and holdings. Both track floating rate markets with educational insights.

Investment Analysis

FLOT

Pros

The fund benefits from a significantly larger asset base of $10.9 billion compared to its peer.
It tracks floating-rate notes, offering some protection against rising interest rates due to variable coupons.
Inception in June 2011 provides a longer operational history than the alternative fund.

Considerations

The expense ratio of 0.15% is slightly higher than the comparable VanEck product.
The dividend yield of 4.34% is marginally lower than the 4.49% offered by FLTR.
Specific sector weightings and top holdings are currently not available in the provided data.

FLTR

Pros

It offers a slightly lower expense ratio of 0.14%, potentially reducing annual holding costs.
The fund provides a marginally higher dividend yield of 4.49% compared to the iShares product.
Like its peer, it invests in investment-grade floating-rate notes, benefiting from variable interest rate coupons.

Considerations

Net assets of $3.3 billion are considerably lower than the $10.9 billion managed by FLOT.
Specific index tracking details are not available, limiting transparency on methodology.
Top holdings and sector weights are listed as not available in the provided data.

About FLOT and FLTR

FLOT (FLOT)

The iShares Floating Rate Note ETF (FLOT) is an exchange-traded fund designed to provide investors with exposure to investment-grade floating rate notes. These are bonds whose interest payments adjust periodically based on prevailing short-term interest rates, often linked to benchmarks like the London Interbank Offered Rate (LIBOR) or the Secured Overnight Financing Rate (SOFR). This structure can potentially help mitigate interest rate risk compared to fixed-rate bonds, as coupon payments may rise when rates increase. With a low expense ratio of 0.15% and substantial net assets of approximately USD 10.93 billion, the fund offers liquidity and cost efficiency. It holds 556 different securities, providing diversification across the floating rate note market. Launched in 2011, it targets investors seeking income in a potentially rising rate environment. However, as with any investment, capital values can fluctuate, and returns are not guaranteed. Investors should consider their risk tolerance and investment objectives before adding such funds to their portfolio.

FLTR (FLTR)

The VanEck IG Floating Rate ETF (FLTR) is an ultrashort bond fund designed to invest in investment-grade floating rate securities. With a low expense ratio of 0.14%, it aims to provide income that can adjust with changing interest rates, potentially reducing some of the price sensitivity seen in longer-term bonds. Currently, the fund has net assets of USD 3.26 billion and holds 458 securities. It offers a dividend yield of 4.49% and was established on April 25, 2011. This ETF may suit investors seeking regular income from short-duration debt instruments, though all investments carry risks. The value of investments can fall as well as rise, and you may not get back the amount you invested. Past performance is not a reliable indicator of future results. Returns are not guaranteed, and capital is at risk.

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FLOT vs FLTR

Fund Snapshot

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Investment Analysis

FLOT

Pros

Considerations

FLTR

Pros

Considerations

About FLOT and FLTR

Buy FLOT or FLTR in Nemo

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Trusted & Regulated

6% Interest on Cash

Frequently asked questions

What are floating-rate notes and why do funds invest in them?

What does 'investment-grade' mean in the context of these ETFs?

How does an ETF differ from a traditional mutual fund?

How do the expense ratios of FLOT and FLTR compare?

How do the dividend yields of FLOT and FLTR compare?

Do FLOT and FLTR hold the same top 10 securities?

Which investing goals are these funds typically associated with?

How might rising interest rates affect floating-rate ETFs like FLOT and FLTR?

How do credit ratings impact floating-rate note ETFs?

What does 'Ultrashort Bond' mean for interest rate sensitivity?

What is the difference in assets under management (AUM) between FLOT and FLTR?

Why is information like 'top holdings' or 'index tracked' sometimes 'not available' for ETFs like FLOT and FLTR?

Fund Snapshot

About FLOT and FLTR

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