Floating rate securities set to yield more

Investors in listed interest rate securities will receive higher payments if interest rates rise. There are an array of interest rate securities readily available on the Australian Stock Exchange where investors can seek to protect their capital while also drawing a decent income. ABN Amro Morgans said most of the securities are floating rate, meaning their coupon, dividend or distribution gets benchmarked against the 90-day bank bill rate. Examples of hybrid floating rate securities which will benefit from a rise in rates are Adelaide Bank Step Up preference shares; ANZ StEPS; CBA PERLS II and the new IAG RES (Reset Exchangeable Securities) issued last month.

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