| As interest rate climb, most bond owners
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| | senior loans. If the company defaults,
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| are shaking their heads. The price of
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| | senior loans must be paid back before
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| existing bonds falls when rates are on
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| | bond holders are. You may not receive
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| the rise. There is a way to offset the
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| | enough to cover your initial investment,
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| decline. You can invest in bank loan
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| | but something is better than the nothing
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| funds, also known as floating rate funds.
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| | you could receive with a high-yield bond.
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| There is a risk to these funds, but they
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| | Typically, in the case of default, the
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| can be a rewarding alternative to
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| | investors will recover 75 to 80 cents on
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| traditional fixed-income investments.Bank
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| | the dollar.The change of losing principal
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| loan funds are made up of loans made by
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| | is reduced because the interest rates on
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| banks or other financial institutions to
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| | the loans reset very quickly. Short-term
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| companies. They are often below
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| | interest rates rise and fall in response
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| investment grade. They aren't really
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| | to the Federal Reserve. That, combined
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| fixed income; there is the potential of
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| | with the short terms of the loans, makes
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| losing money. The funds can provide a
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| | for a fund that responds quickly to the
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| return equal to or better than high-yield
| |
| | rise and fall of interest rates.Many
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| money market accounts. The loans that
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| | brokerages, including Merrill Lynch and
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| make up the funds are short-term. This
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| | Eaton Vance, sell bank loan funds. In
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| allows the lenders the opportunity to
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| | certain asset classes there may be a high
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| frequently raise the interest rate. This
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| | expense ration. Make sure that you check
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| helps the funds keep pace with interest
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| | every fund out carefully.Many funds in
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| rate changes and helps keep the principal
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| | this group allow investors to buy shares
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| more stable than with a typical bond
| |
| | at any time. There are some funds that
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| fund.According to many portfolio
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| | will allow you redemptions at any time,
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| managers, the way the loans are
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| | while others will restrict you to monthly
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| structured removes a lot of the risk to
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| | or quarterly redemptions.Martin Lukac (
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| investors. The loans are secured by cash
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| | represents and a finance web-company
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| or assets. The funds are not
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| | specializing in real estate/mortgage
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| independently rated, but experts say the
| |
| | market. We specialize in daily updates,
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| bank should be able to show you the
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| | rate predictions, mortgage rates and
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| performance of the fund. The bank will
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| | more. Find low home loan mortgage
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| package the loans and sell them, and the
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| | interest rates from hundreds of mortgage
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| funds come into play.Ban loan funds are
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| | companies!
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