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PHD Floating Rate Funds Time to Buy?

(Update April 16:  from Barrons:  “”Daniel Gamba, who heads the iShares institutional ETF business at BlackRock, was just on CNBC talking about the popularity of floating-rate funds such as the iShares Floating Rate Note ETF (FLOT), which he says has quadrupled in size (my colleague Brendan Conway wrote recently that floating rate ETFs ballooned in size by 83% in the first quarter of this year).””

(Update April 2:  Possibly a buying opportunity.  Watching again as PHD is dropping. Try and buy at $13.40-$13.60.  Paying 6.5%)

(Another Update:  Incredible, skyrocketing up to $14.24.  March 18 Update:  PHD is doing exactly the opposite of what I expected.  It’s going up!!!!!.  There is obviously a lot of interest from buyers.  I would not buy at the price today which is $13.97 as I write this.  Try and grab at lower levels:  $13.67 is Support and this could be an entry.)

I was fascinated by a comment that was posted on a financial site that I respect:  floating rate funds are usually purchased by astute investors in advance of interest rate hikes.  The idea is that as the Fed increases interest rates, the dividends paid by floating rate instruments will also increase.

I have suggested floating rate funds on several occasions recently…specifically PHD.  Interest rates will go up, maybe next year, maybe two years from now.  Who knows.  But as the quote suggests, the smart people are buying in advance of the rate increases….and collecting dividends while waiting.

Pioneer Floating Rate Trust (PHD) is trending down and may reach the $13.00 area.  Support is currently $13.61 and that may be a good entry.  By watching the technicals we will be able to identify a buy price.  Wait and see before buying.  PHD is paying just under 7%.

Additional funds that you can consider are AFT and VTA ……and there are even more of them out there for consideration.

Start with one percent of the portfolio, but buying up to 4% is ok.

I am not an investment professional.  You must do your own research before buying any position.  All gains or losses that you realize are based on your choices.


One comment on “PHD Floating Rate Funds Time to Buy?

  1. […] I have talked about PHD…here is the link. […]

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