Elevated short-term rates, persistent inflation risks and an uncertain policy outlook have brought floating-rate notes back into focus. In our latest investment case, we review US Treasury, corporate and supranational FRNs, their key mechanics, current appeal and main risks. With front-end yields still attractive and duration exposure very limited, FRNs can provide a useful source of running income and help manage interest-rate risk. We see them primarily as a satellite allocation within a diversified fixed-income portfolio, complementing fixed-rate bonds and TIPS rather than replacing them. Liquidity also deserves particular attention: individual FRNs can trade less actively than traditional bonds, making careful price and bid-offer checks especially important before trading. The report also includes a selection of USD FRNs currently available in the market.
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