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Floating dollar notes

iShares to launch first Treasury Floating Rate Bond ETF

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iShares has launched the first exchange-traded fund providing exposure to US Treasury Floating Rate Notes (FRN), the first new security from the Treasury in 17 years.

The iShares Treasury Floating Rate Bond ETF (TFLO) represents an expansion of iShares short duration ETF product suite to help investors reduce interest rate and credit risk within their fixed income portfolio.
 
Treasury FRNs are a new type of Treasury debt with an interest payment that changes over time. The coupon rate on these securities will reset daily using the most recent 13-week Treasury bill auction rate plus a spread. The first auction of USD15bn took place on 29 January.
 
iShares Treasury Floating Rate Bond ETF seeks to track the Barclays US Treasury Floating Rate Index, a new index initially composed of the first-issued Treasury FRNs. Index holdings are expected to increase with ongoing quarterly issuance of the Treasury FRNs.
 
Matthew Tucker, head of iShares fixed income investment strategy, says: “iShares is thrilled to offer investors the first ETF with exposure to Treasury Floating Rate Notes. TFLO addresses two things investors are looking for today – potentially less interest rate risk in their fixed income portfolios and the relative safety of US Treasuries. TFLO also expands investors’ options for short duration ETFs in today’s challenging market environment.”

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