This is an actively managed bond ETF that invests mainly in senior secured floating rate loans and adjustable-rate bonds. It focuses on below-investment-grade holdings to pursue high income and carries floating rate characteristics.

It suits income-oriented investors who want high income, understand credit risk and liquidity risk, and expect some protection against rising interest rates.

It is an ETF run by Pacer using an active management approach.

The fund spreads most of its assets across senior secured floating rate loans and adjustable-rate bonds. It concentrates on below-investment-grade, or high-yield, floating rate holdings to pursue high income, and its floating rate structure provides relatively strong exposure during periods of rising interest rates.

• Concentrated in below-investment-grade floating rate loans
• Floating rate structure offers relative resilience to rising interest rates

Assets under management (AUM) are $1.1B, and the Expense Ratio is 0.60% per year.

Unlike investment-grade bonds, many borrowers have lower credit ratings, which lifts income, but default and liquidity risks become more prominent when the economy slows.

Floating rate loans are affected by the direction of interest rates, corporate credit conditions, and the economic cycle. Thanks to their floating rate structure, they tend to hold up better than bonds when rates rise, but default risk and price volatility can increase when the economy slows or credit concerns grow.

Money tends to flow into floating rate ETFs when demand rises for protection against higher rates and for high income, and it can leave quickly when recession fears or credit risk increase.

Its strengths are the high income from floating rate holdings and protection against rising rates, while its weaknesses are credit risk, liquidity risk, and active management fees.

FLOT, FLRN, and PFRL shown in the table are ETFs that invest in investment-grade floating rate bonds or floating rate income, so their credit quality and strategies differ. For more exposure to floating rate loans, you can also compare the flagship bank loan ETF BKLN, the actively managed senior loan ETF SRLN, and the top-rated collateralized loan obligation ETF JAAA. They differ in credit quality, management style, and fees, so it is best to choose according to your risk tolerance.

Here are the points to review before investing in FLRT. As a floating rate high income ETF, it is important to check credit risk, liquidity risk, interest rate sensitivity, and the fee level in advance.

Many borrowers have lower credit ratings, so default risk and price volatility can increase when the economy slows, and the low liquidity of the loan market is also a risk factor. The fees that come with active management should be considered as well.

It is an active ETF suited to income-oriented investors who want high income and protection against rising rates while understanding credit and liquidity risks. If you want investment-grade floating rate exposure, an investment-grade floating rate ETF may be the alternative, and if you want high-income floating rate loans, FLRT can be an option.