Cahaba Research
Value, growth at reasonable price, long-term horizon

The First Trust Intermediate Duration CEF Offers 8.7% Yield, Total Return Potential Of 19%, And Minimal Rate Risk

First Trust Intermediate Duration Preferred & Income Fund (NYSE:FPF) is a recently created closed-end fund (or CEF) offered by First Trust and managed by Stonebridge Advisors LLC. We believe that FPF has been unfairly beaten-up because its retail investor base lacks a proper understanding of the economic sensitivity of the fund's NAV to rising interest rates. At the current trading price of 20.90, the fund trades at a discount to NAV of 10.7% and offers an attractive 8.7% yield, providing a total return opportunity of ~19%. We believe investors can achieve these equity-like returns while only taking fixed income-like risk due to how FPF's portfolio is constructed and the PM team's conservative mandate for managing FPF.

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