FLOT vs SCHJ

FLOT—iShares Floating Rate Bond ETF

SCHJASchwab 1-5 Year Corporate Bond ETF

In short

FLOT The oddball in the short-corporate aisle: FLOT owns bonds whose coupons reset with short-term rates, so interest-rate sensitivity stays near zero while the credit stays investment grade. Running since 2011.

SCHJ Short-dated corporate credit at index-fund pricing. SCHJ tracks the Bloomberg US 1-5 Year Corporate Bond Index for 0.03% a year, sits at the bottom of its category's fee table, and pays monthly.

Stated mandate

FLOT The fund seeks to track an index of U.S. dollar-denominated, investment-grade floating-rate bonds, offering exposure to corporate debt while seeking to reduce interest-rate risk and generate income.

SCHJ The fund seeks to track, before fees and expenses, the total return of an index measuring the short-term U.S. corporate bond market.

Why people hold it

• FLOT Coupons reset periodically instead of sitting fixed, which keeps interest-rate sensitivity very low. Rate swings move it far less than fixed-coupon bond funds.ishares.com
• Investment-grade paper only, with maturities from one month to five years, spread across about 600 holdings. No junk, no long bonds.ishares.com
• Pays monthly, trades actively, and has tracked its Bloomberg floating-rate note index closely. A multi-billion-dollar fund with a record going back to 2011.

• SCHJ 0.03% a year, against a 0.19% median for investment-grade corporate ETFs. No peer in the cohort charges less.
• Thousands of individual bonds in the basket, so no single issuer's trouble moves the fund much.
• The 1-5 year maturity ceiling means less price swing per move in rates than intermediate corporate funds like VCIT or IGIB, which sit further out the curve.
• Interest is passed through monthly rather than quarterly, and the fund ranks in the top quartile of its investment-grade corporate peer group overall.

Worth knowing

• FLOT At 0.15% it sits right at the median for its short-corporate cohort, but fixed-coupon peers like VCSH (0.03%) and SPSB (0.04%) charge a fraction of that.
• The float cuts both ways: income follows short-term rates, so the monthly payout shrinks when those rates fall.ishares.com
• Low rate sensitivity is not credit protection. This is corporate debt, and prices can slip when credit spreads widen.

• SCHJ This is company debt, not Treasuries. Downgrades and defaults are part of the deal, and short maturities shrink that risk without erasing it.
• A mid-size fund with moderate trading volume, so spreads can run wider than at the category's giants. Limit orders matter more here.
• Launched in 2019, so its record is shorter than rivals that traded through earlier credit cycles.

Full FLOT profile⁠

Full SCHJ profile⁠