BMO Floating Rate Hi Yield ETF (ZFH-T)

Floating rate notes tend to do very well in general when yields are rising. No price change over the last 5 years, but you're earning about 5.5% right now. Doesn't love that credit spreads are really tight, and that this brings the risk of high yield.

Floating rate notes tend to do very well in general when yields are rising. No price change over the last 5 years, but you're earning about 5.5% right now. Doesn't love that credit spreads are really tight, and that this brings the risk of high yield. This fund won't protect you from widening credit spread in a hard landing, so you have more risk than you think.

Have a look at private mortgage companies and residential exposure -- better protection, diversification, and yield.

They use a derivative structure to get pure credit exposure, but credit spreads are tight. However, it mitigates the interest rate risk.

Not a good option if we head into recession. Would not recommend buying. Not a good defensive name. Products are too complex for average investor. 

ZFH-T is exposure to short-term high yield credit using a swap strategy to mitigate the interest rate risk. You still get credit risk. ZHY trade more like equities than bonds. People are seeking the higher yields. A floating rate note mitigates the interest rate risk only.

4.9% yield. Holds exposure to a high yield index so you get a high yield return. There are risks. It is very similar to the volatility of the market.

Floating rate gives you the resetability when interest rates change. It is a good way to mitigate the downside when interest rates change, although he does not see them changing over the next year or so. You are getting a lower return on this one as well. There are a lot of pros and cons – it depends on the investor’s situation.

Floating rate high yield. Chart is almost flat. You are waiting for central banks. You will wait for another year. It is dead money for a while.