Is FLOT a good ETF?
FLOT is the VanEck Australian Floating Rate ETF from VanEck. We classify it under Bonds and AU. With about $1.24 billion in assets it is a large, highly liquid fund.
On a total-return basis, FLOT has delivered 3.73% a year over 5 years (ranked 133rd of 188 ETFs we track), 5.04% a year over 3 years (ranked 178th of 226 ETFs we track), and 4.66% a year over 1 year (ranked 191st of 308 ETFs we track). It has trailed most comparable ETFs over the periods we measure, so look closely at whether its strategy fits what you're after.
The management fee of 0.22% is reasonable. That's cheaper than the typical 0.32% for similar ETFs. It pays a healthy 4.46% yield, attractive if you want regular income. Bear in mind distributions are taxed each year at your marginal rate, so a high yield is less tax-efficient for higher earners and during the accumulation phase.
Over the past 5 years its volatility has been low (annualised standard deviation around 0.7%), meaning a relatively smooth ride. Its 5-year Sharpe ratio of 1.26 is strong — that's the return it has earned per unit of risk taken (higher is better).
Portfolio turnover is moderate at about 30% a year — a fair chunk of the portfolio is bought and sold each year, so expect a little more in the way of realised capital gains and trading costs than a plain index fund.
Strengths
- Low-cost: a 0.22% management fee keeps more of the return in your pocket.
- Pays a useful 4.46% income yield.
- Strong risk-adjusted returns (5-year Sharpe ratio 1.26).
- Low volatility (0.7% over 5 years) for a smoother ride.
Things to watch
- Has lagged most peers over 3 years (178th of 226).
Good to know
- Australian focus means franked dividends and no currency risk, but heavy concentration in banks and miners.
What FLOT's categories mean for you
How each category this ETF belongs to tends to behave across market cycles.
Australian shares. Home-market familiarity, fully franked dividends and no currency risk for local investors — but very concentrated in banks and miners, which dominate the index.
- Market regime
- Sensitive to commodity prices, Chinese demand and domestic interest rates. Generous income, but narrow sector diversification.
- In a portfolio
- A natural core for Australian investors thanks to franking, but should be paired with global exposure so you aren't over-reliant on a handful of banks and resource giants.
General information only, generated from the fund's published data — not personal financial advice. Past performance is not a reliable indicator of future returns. Consider your own circumstances or seek licensed advice before investing.