Rates Stuck But Floating Rate Funds Still Gaining Altitude
Floating rate funds have performed well in 2016 despite the fact that interest rates have failed to gain much altitude. George Goudelias, portfolio manager of the RidgeWorth Seix Floating Rate High Income Fund (SAMBX) - Get Report , is enjoying the gains, but becoming a bit more defensive. 'We are peeling some risk off into this rally,' said Goudelias. 'We are adding more sleep at night companies in the aerospace sector, cable sector, lodging sector, and tech sector. Cash levels are at the higher end of our most recent range.' The RidgeWorth Seix Floating Rate High Income Fund is up 7.1 perecent so far in 2016, according to Morningstar. The $4.3 billion fund has returned an average of 2.8 percent annually over the past three years, outpacing 83 percent of its rivals in Morningstar's bank loan category. The fund sports a trailing twelve month yield of 4.7 percent, according to Morningstar. Leveraged finance had a good first half of 2016. Goudelias said there was a strong rebound from a new issuance standpoint with $86 billion in the second quarter, up from $41 billion in the first quarter. Overall, supply is down 20% year-over-year with M&A overtaking refinancing as the primary reason for companies to issue debt.
