What is a floating-rate bond ETF?

Floating-rate bond ETFs invest in securities whose interest payments reset periodically based on a reference rate. Because coupons adjust, these funds generally have less sensitivity to rising rates than fixed-rate bond funds.

However, floating-rate funds often hold bank loans or lower-credit-quality debt, which can increase credit and liquidity risk. They can drop sharply in recessions or credit shocks.

If you're considering one, check what it actually holds (loans vs investment-grade floaters), credit quality mix, and how it performed during credit stress periods. Rate protection isn't the only risk that matters.