Comparing floating rate high yield income strategies

8 min read 8 Mar 22

  • High yield floating rate notes (HY FRNs) and leveraged loans are both potential sources of senior-secured, high yield income that aim to significantly reduce interest rate risk in an investor’s portfolio. 
  • While investors may expect these strategies to achieve similar outcomes, there are still important differences between them. 
  • Although the market is smaller, HY FRNs typically offer better liquidity than loans, while potentially reducing cyclical risks and offering other diversification benefits.

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