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Fixed income

A guide to high yield floating rate notes – seeking protection against rising interest rates and inflation

4 min read 7 Mar 22

By M&G Investments
  • High yield floating rate notes (HY FRNs), also known as floating rate bonds, are a growing subset of the global high yield (HY) bond universe. 
  • Their main potential advantage over traditional HY bonds is their floating rate coupons, which generate income that rises in line with interest rates and potentially reduces the risk of capital loss in rising rate environments due to their minimal interest rate sensitivity (duration).
  • Despite being smaller than the global HY bond market, HY FRNs are liquid securities and daily dealing can be maintained, even in stressed market conditions.

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By M&G Investments

The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.

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The value of the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.

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