Floating Rate Bond ETFs Your Broker Forgot to Mention

As global equity markets remain volatile, bond funds continue to thrive as investors continue to look for somewhere to stash their cash, no matter how anemic interest rates are. One overlooked option some investors might want to consider is floating rate securities, or those that offer interest payments which reset periodically, with rates tied to a representative interest rate index, according to InvestingInBonds. "Floaters," as they are often referred to as, offer another benefit. These securities often have short durations, which significantly reduces exposure to the risk of rising interest rates. Interest paid on floaters is not compounded, but many do pay make monthly payouts, helping boost the allure of these products for income investors. Of course there are ways for investors to access floaters via ETFs. Not surprisingly, given that floaters do not get much attention in the bond world, floating rate bond ETFs do not get much press among bond funds. Here three your broker probably forgot to tell you about. iShares Floating Rate Note Fund FLOT By far the largest of the floating rate bond ETFs, the iShares Floating Rate Note Fund has amassed $239 million in assets under management since its June 2011 debut. FLOT stands out as valid option for investors craving a low duration bond fund with an effective duration of just 0.14 years according to iShares data. Home to 215 holdings, FLOT features a 30-day SEC yield of 1.12 percent and a favorable expense ratio of 0.2 percent. More than 75 percent of FLOT's holdings hail from the banking and industrial sectors while another 11.5 percent of the fund's weight is allocated to agency bonds. Market Vectors Investment Grade Floating Rate ETF FLTR The Market Vectors Investment Grade Floating Rate ETF is the oldest of the floating bond ETF trio, having debuted in April 2011. Although FLTR is far smaller than its iShares rival with just $7.3 million in AUM, FLTR is also slightly less expensive with annual fees of 0.19 percent. FLTR is also smaller by number of holdings with 21 and this ETF features an average modified duration of almost 2.7 years. Year-to-date, FLTR has gained 4.3 percent compared to a 2.4 percent jump for FLOT. On the Standard & Poor's rating scale, almost 96 percent of FLTR's holdings are rated investment grade. The ETF has a 30-day SEC yield of 1.13 percent. SPDR Barclays Capital Investment Grade Floating Rate ETF FLRN The SPDR Barclays Capital Investment Grade Floating Rate ETF is the newest member of the floating rate ETF group, having debuted in November 2011. It is also the least expensive fund in the trio with an annual expense ratio of just 0.15 percent. With 102 holdings, FLRN has a modified adjusted duration of just 0.13 years. FLRN has $9.1 million in AUM and a 30-day SEC yield of 1.16 percent. For more on obscure bond ETFs, click here.