Originally Posted by bUU
We met with our financial adviser (a one year experiment) and he mentioned a few things he wanted to recommend regarding our excessive cash reserve. He mentioned, specifically, investing in bank loans, i.e., floating rate funds. I'm just starting to research them, and would appreciate any input.
I moved some intermediate bond gains into Fidelity Floating Rate, starting in November 2011. However, floating rate vehicles are risky and can flunctuate like stock (I think the Fidelity was down 24% or so in the '08-09 crash), largely because you are taking on both repayment risk by the company, although it is generally short-term, and some bank risk. I did so to reduce interest rate risk.
See today's WSJ article: Bank-Loan Funds Pose New Risks - WSJ.com