PGIM Investments has broadened its actively managed ETFs range with the launch of a floating rates strategy which will mirror an existing $4.6bn (€4.3bn) fund.

The PGIM Floating Rate Income ETF aims to counter the increasingly challenging rate-rising environment, which has put huge pressure on bond allocations.

The New Jersey-headquartered group said the fund will draw on the experience of the bond team, which currently oversees $38bn in floating rate-specific strategies.

This management team is comprised of Citywire + rated managers Brian Juliano and Parag Pandya, Citywire A-rated Robert Cignarella, as well as co-managers Ian Johnston and Robert Meyer. This quintet run the existing PGIM Floating Rate Income fund and will also have responsibility for the ETF.

Juliano, head of US leveraged loans at PGIM Fixed Income, said: ‘Mechanically, the coupons that bank loans pay reset on short-term interest rate movements, which may help to mitigate the impact of rising interest rates.

‘This structure, when paired with active management and a well-researched credit selection process, seeks to provide investors with an opportunity to be rewarded as market volatility continues.’

PGIM Investments said the leveraged loan/floating rate loan market has become more popular to help protect against rising rates. It added that an actively managed fund can help navigate more complex and volatile markets.

The PGIM Floating Rate Income fund, which is US domiciled, currently sits 12th out of 106 funds in the Bonds – Floating Rate Notes sector for its returns over three years to the end of April 2022. It returned 11.6% in US dollar terms against a sector average of 6.6%.