Comparing floating rate high yield income strategies

7 min read 1 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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The value and income from a strategy's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee the strategy will achieve its objective, and you may get back less than you originally invested. Please note that past performance is not a guide to future performance.

By James Tomlins

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