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Bank-Loan Funds Are in a Sweet Spot

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As interest rates fell in 2019 and 2020, investors paid bank loans little attention. But an economic recovery and the likelihood of rising short-term interest rates are prime conditions for these loans, which pay an interest rate that adjusts every few months in step with a short-term bond benchmark. When yields rise, most bond prices fall. But bank loans, often called floating-rate loans, retain their value.

The managers at Fidelity Floating Rate High Income (FFRHX), Eric Mollenhauer and Kevin Nielsen, perform detailed analysis on each........

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