Floating Rate Notes Will Perform Just Fine When Fed Finally Moves

The Federal Reserve will likely not raise rates until the second half of 2015 and when they do floating rate notes will respond accordingly, said William Lemberg, portfolio manager for the Dreyfus Floating Rate Income Fund. Lemberg said he expects the yield on the 10-year Treasury note to remain low for the coming year. He added that his favorite sectors are industrial companies, autos and chemical manufacturers which will see their credit quality improve with the economy. Lemberg said he chooses the floaters based on bottoms-up credit analysis and he continues to find value in the market.