Franklin Templeton has published a brochure that it is handing out to advisors and making available on its Web site promoting its Floating Rate Daily Access Fund. The guide was developed to educate investors who are looking for an investment that offers the potential to provide competitive returns in a rising rate interest rate environment, said Matt Walsh, spokesman. Class A-shares of the fund returned 3.99% for the past year as of Aug. 31, trailing its benchmark, the Lehman Brothers Aggregate by .47%, according to Morningstar. The fund had $934 million in total assets as of Aug. 31, according to Morningstar.
NYLIM launched its MainStay Floating Rate Fund last May and is promoting the fund through white papers, e-cards, brochures and seminars, highlighting it as one of the few funds with daily liquidity and a higher market than high yield bonds, said Chris Blunt, executive v.p. of retail investments. As of Sept. 28, the fund has over $350 million in assets, he said.
Eaton Vance also rolled out a brochure touting its Floating-Rate Fund, which launched in 2001. The asset manager, which has almost $15 billion in bank loan assets, is discussing other ways to tout its knowledge in this area, said Meg Pier, spokeswoman. We are conducting conference calls with professionals with whom we sell the funds. The funds I-shares have returned 5.45% for the past year. It had $3.5 million in assets as of Aug. 31, according to Morningstar.
Scott Berry, a Morningstar analyst, said that while the interest rate hike might allow floating rate funds to perform well now, the optimal time to invest in the funds would have been in 2002. Investors that are getting in now kind of missed out, he said. Walsh said that despite this years rise in short-term interest rates, It is anticipated that, along with long-rates, short-term rates will continue to rise. Thus, having an investment vehicle like floating-rate loans should continue to be attractive in this type of environment.