The new ETF seeks to track the Market Vectors Investment Grade Floating Rate Index (MVFLTR), an index which consists of a portfolio of corporate US dollar-denominated investment grade floating rate notes.
Van Eck said FLTR is an innovative departure from typical floating rate funds because its underlying index tracks a portfolio of high quality, floating rate notes rather than tracking bank loans.
Van Eck Global principal Jan van Eck said FLTR may offer an attractive alternative for conservative investors seeking investment grade quality, lower interest rate risk, and attractive income potential relative to other instruments of similar duration.
Floating rate notes, or floaters, have coupons that vary and are linked to three-month LIBOR (London Interbank Offered Rate), the interest rate large banks charge each other for short-term loans, or other money market reference rates plus a spread.
FLTR is intended to track the performance of Market Vectors Investment Grade Floating Rate Index (MVFLTR), published by 4asset-management GmbH. As of 31 March 2011, the index was comprised of 188 securities across five sectors.
