A giant in the private-equity business is prepping a mutual fund that will invest in riskier corporate loans. Blackstone Group
is one of a number of financial services firms preparing to open a floating-rate mutual fund, reports SmartMoney
Last month Bloomberg
reported that Blackstone Group's GSO Capital Partners
has paired up with BlackRock
and Goldman Sachs
to create such a fund, according to the New York Times Dealbook column
. The article linked by the paper now longer exists.
Blackstone currently offers only closed-end mutual funds. Neither article details the structure of the discussed fund.
report adds that State Street
is also readying a floating rate fund.
The creation of 17 floating-rate mutual funds funds since 2010 has pushed the total number in the category to "about 40."
Mutual fund investors seeking better yields are putting cash into "risky floating rate" mutual funds, according to the report. Shareholders poured $1.8 billion into mutual funds investing primarily in adjustable-rate leveraged loans made by banks to highly indebted companies through May 23.
Yet, that flow rate is well below the pace set last year when such funds took in a net $13 billion, according to Thomson's Lipper research arm.
Yields on floating-rate mutual funds now reach as much as 6 percent.
Sean Hanna, Editor in Chief
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