New York Life Investment Management (NYLIM) has filed with the Securities and Exchange Commission to launch the Mainstay Floating Rate Fund, while Nuveen Investments also has in the works a public offering of a closed-end exchange-traded fund investing in loans.
Floating-rate funds have caught on among retail investors with firms such as Eaton Vance and Merrill Lynch raising a total of $900 million of assets in their offerings last year (LMW, 12/2). Bank loan or floating rate funds gained a 10.4% return in 2003, according to Morningstar. "It's the best annual return since we started tracking the group in 1990," said Scott Berry, a Morningstar analyst.
NYLIM's Tony Malloy and Robert Dial will manage the fund. Nancy Paris, spokeswoman, confirmed the filing but could not provide details. The fund will invest 80% of its assets in a diversified portfolio of floating rate loans and other floating rate debt securities, according to the filing.
The Nuveen fund, planned for March 2004, is called the Nuveen Floating Rate Income Fund, according to a statement from the manager. Portfolio managers from Nuveen's Symphony Asset Management team will manage the fund. A Nuveen spokeswoman declined comment as the fund is in a quiet period. The Symphony unit is also raising two bank loan funds that short loans as part of the strategy (LMW, 2/9).