Floating rate notes' short duration gives them a measure of relative price stability, while offering investors' portfolios some support through variable income.
It's the prospect of higher rates for longer, along with the inverted yield curve, that make floating rate notes an attractive play for some.
For his clients, Winter has committed between a quarter and a third of investors' fixed income allocation to floating rate notes.
"It's lower coupon rates versus the opportunity to lock in high fixed rates now if you consider the environment," said Collin Martin, fixed income strategist at Charles Schwab.
That means in a recession, you may not get an increase in floating rate note prices to offset a decline in equities, he said.
Persons:
Allison Bonds, Bonds, Jerome Powell, Paul Winter, Winter, aren't, Collin Martin, Charles Schwab
Organizations:
State Street's U.S, Treasury Bond ETF, Federal Reserve, Federal, Five
Locations:
Treasurys