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Moving up in floating rate bonds

Advisers see promise for higher quality floating rate funds

Floating rate bond funds are providing some shelter in a rising-rates storm, but advisers see reasons to become more careful in picking where investors seek protection.

The growing popularity of floating rate bonds, which are often called bank loans, has led to a boom in issuance of these short-term securities. The majority of such activity is rated below investment-grade, and in some cases, involves increasingly risky leverage levels, portfolio managers point out.

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