Van Eck Global has lowered the expense cap of its Market Vectors Investment Grade Floating Rate ETF (FLTR) from 0.19 per cent to 0.14 per cent.
“We expect the reduced pricing will make FLTR a more attractive option for income investors looking to decrease interest rate sensitivity in their portfolios,” says Meredith Larson, the fund’s product manager. “FLTR offers investors exposure to investment-grade floating rate notes (FRNs), and was recognised by Morningstar at the end of September with a 5-star overall rating.”
Market Vectors Investment Grade Floating Rate ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of Market Vectors US Investment Grade Floating Rate Index (MVFLTR), which consists of US dollar-denominated floating rate notes issued by corporate issuers and rated investment grade by at least one of the three rating services: Moody’s, Standard & Poor’s, or Fitch.
The underlying index was designed to target corporate FRNs and have an allocation bias to longer-maturity notes, which has helped reduce duration and enhance yield potential. The FRN floating-rate feature effectively reduces interest rate duration to near zero regardless of years to maturity.
