iShares $ Floating Rate Bond UCITS ETF - GBP Hedged (Dist)

Issuer: iShares

Asset Class: Fixed Income

TER: 12bps

Trading Currency: GBX

Pays Income: False

Listing Date: 01 Sep 2017

Ticker: FLOS

ISIN: IE00BF7TPM11

This fund provides exposure to a diversified portfolio of US dollar-denominated, investment-grade floating rate notes (FRNs). FRNs are debt instruments with variable interest rates that reset periodically, typically based on a benchmark reference rate. The core feature of this investment is its ability to mitigate interest rate risk, as the coupon payments adjust to changes in prevailing short-term rates. This characteristic makes the bond's price less sensitive to interest rate fluctuations compared to traditional fixed-rate bonds. The fund is also currency-hedged, which means it implements a strategy to minimise the impact of exchange rate volatility between the US dollar and the pound sterling, making it particularly suitable for investors whose home currency is sterling.

This product is designed for investors seeking a conservative element for their fixed income allocation, especially in an economic environment characterised by rising or volatile interest rates. It can function as a tool for capital preservation while aiming to generate a modest income stream that adapts to shifts in monetary policy. The monthly dividend distribution schedule can be particularly attractive for those focused on regular income generation. The currency hedging makes it appealing for UK-based investors looking to access the US floating rate note market without assuming currency risk. Consequently, it can serve as a lower-volatility component within a broader portfolio, offering a potential alternative to cash holdings or short-duration fixed-rate bond funds.