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3 Floating Rate ETFs to Try as Interest Rates Set to Rise

BY | ETF Database
6:27 am ET 09/16/26 | 24 VIEWS
The Fed is having its latest meeting this week, amid growing concern over yields and inflation. The two day session is widely expected to include the Federal Reserve raising rates at least somewhat to try to assuage markets. That puts pressure on portfolios, but also creates opportunities in key fixed income ETF categories. Floating rate ETFs like the iShares Floating Rate Bond ETF (FLOT A), for example, can help amid rising rates.Key Takeaways: Floating rate ETFs could help investors’ bond holdings ride out rising rates. With the Fed poised to raise rates this week, and maybe even more in the future, their shifting coupons can help. FLOAT, FLTR, and FLRT also offer solid performance, returning about 4.5% on average across the last calendar year. FLOT is one of a trio of notable floating rate ETFs to watch. The strategy charges a 15 basis point (bps) fee to track the Bloomberg US Floating Rate Notes index. Where other bond funds invest in fixed coupon bonds, impacted by rate changes, FLOT differs. It invests in bonds with coupons that adjust as rates do. While that does mean lower effective yields, it helps ride out a shifting rate picture. FLOT stands out relative to other floating rate ETFs in its long term performance. According to ETF Database data, the floating rate ETF has returned 4.4% over the last 12 months and 5.4% over the last three years. That has helped it compete with other bond areas like corporate bonds. It has also provided a 30-day SEC yield of 4.04% as of September 11. The VanEck Floating Rate ETF (FLTR B+) may also have some appeal. FLTR charges a 14 bps fee, competitive with FLOT. The strategy offers a similar coupon approach that FLOT does, shifting along with rates. FLTR has returned 4.9% over the last 12months and 5.9% over the last three years according to ETF Database. FLTR provided a 4.22% 30-day SEC yield as of September 14. Finally, the Pacer Aristotle Pacific Floating Rate High Income ETF (FLRT A-) may appeal. FLRT’s floating rate approach charges a 60 bps fee, and differs from the other two ETFs with its active approach. FLRT’s proprietary approach looks to avoid the risks in the lower end of the credit market, applying bottom-up credit analysis. FLRT has returned 5.4% over the last 12 months per ETF Database with that approach. What’s more, the fund has returned a strong 7.6% over the last three years, as well. It also has the strongest 30-day SEC yield among the trio, at 6.25% as of September 14. Together, that trio of floating rate ETFs could prove a solid option set for a potential rate hike. With the ETF wrapper’s trademark flexibility and tradability, they may be worth watching in the weeks ahead. For more news, information, and analysis, visit the Fixed Income Content Hub.

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