Today, we will talk about what a floating rate fund is and how it works. A floating rate fund is a fund that invests in financial instruments that pays a variable or floating interest rate, typically including bonds and debt instruments. The fund aims to provide investors with a flexible interest income in a rising rate environment. While floating rate funds offer yields in a rising rate environment since they fluctuate with rising rates, investors must weigh the risks of investing in the funds and research the fund holdings. They can be an attractive way to diversify fixed-income investments.
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