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Mon, Apr. 21, 1:40 PM
- The PowerShares Variable Rate Preferred Portfolio (VRP) will track the Wells Fargo Hybrid and Preferred Securities Floating and Variable Rate Index to gain exposure to capital weighted pool of preferred stocks and qualifying hybrid securities.
- Lorraine Wang, Invesco PowerShares Global Head of ETF products and research, said in the statement earlier: “We believe VRP offers investors the potential for high current income and lower interest-rate sensitivity than traditional fixed-rate preferred securities. Dividends from variable-rate preferred securities also receive preferential tax rates compared to interest income, which makes them particularly attractive for top tax bracket investors.”
- This would be the third preferred stock focused ETF for Invesco, with the Preferred Portfolio (PGX) and Financial Preferred Portfolio (PGF) returning 5 and 6% respectively since the start of 2014.
- Other preferred share ETFs: PFF, CWB, PSK, PFXF, SPFF, IPFF, CNPF, FPE
Mon, Apr. 7, 3:49 PM
- Investors in bank preferred securities (PGF -0.1%), (PFF -0.1%) may want to shift into shorter durations, says Barclays credit strategist Shobhit Gupta, as a strong first quarter has left their yields more exposed to interest rate risk.
- Particularly interesting are some new-gen securities trading past their first call date and paying floating coupons. Generally trading below par, they have negative duration. Most also have minimum coupon floors ranging from 3.5%-5.57%, making it a little more challenging to figure their rate sensitivity.
- Gupta's favorites are floating-rate preferreds from U.S. Bancorp (USB -1.3%) and Goldman Sachs (GS -2.7%), while those from Wells Fargo (WFC -1.7%) look rich thanks to their high coupon floor.
Fri, Mar. 14, 9:59 AM| 1 Comment
Thu, Mar. 13, 12:48 PM
- ETFs are primarily passively-managed - with only 84 actively managed funds out of a total of 1,570 U.S. listings - but several are holding their own, writes Cinthia Murphy, and a few are beating their indexed counterparts YTD. The five best this year:
- The Pimco Build America Bonds Strategy (BABZ +0.6%) is up 4.4% vs. 5% for the indexed PowerShares Build America Bond ETF (BAB +0.5%). Pimco's offering is pricey - 45 basis points - but it's the wide bid-ask spread averaging 28 basis points investors should most be aware of.
- The First Trust Preferred Securities and Income ETF (FPE +0.1%) is ahead 4.61% YTD, about inline with the PowerShares Financial Preferred ETF (PGF).
- The Columbia Select Large Cap Growth ETF (RWG -1%) is up 6.76% YTD, but has only gathered $16M in assets over four years in existence. The combined 80 bp expense ratio and wide bid-ask spread leads to a rough cost of about 113 bps. Indexed offerings in the same category like IWF and VUG are up less than 3% this year.
- The PowerShares Active U.S. Real Estate ETF (PSR -1.2%) is up 6.77% YTD vs. indexed competitors IYR and VNQ up 7.88% and 9%, respectively.
- Leading the way is the First Trust Global Tactical Commodity Strategy ETF (FTGC) up 15.14% - it's the only actively managed commodity ETF.
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Jul. 17, 2013, 1:37 PMFinancial sector (XLF) prospects are more promising today than they've been for a few years, writes Fidelity's Chris Lee, noting repaired balance sheets, contained expenses, and the housing upturn. Toss in rising interest rates and the potential for accelerating capital returns. Priced in? No, he says, as valuations remain attractive. Offsetting the positive are regulatory concerns, the effect from the end of QE, and a re-bubbling up of EU troubles. | 1 Comment
Jul. 9, 2013, 7:32 AMSo much for late fees as a profit center. The credit card delinquency rate fell to 2.41% at the end of Q1 from 2.47% three months earlier - it's the lowest rate since 1990 and far below the 15-year average of 3.87%. Can the rate decline further? An improving economy is likely to induce banks (XLF) to lend to riskier borrowers and consumers to take on additional debt as evidenced in yesterday's consumer credit report. | Comment!
Jul. 8, 2013, 4:30 PMThe new FDIC leverage rule for banks is reportedly going to be 5%, reports CNBC, well-above Basel's 3% requirement, but below the 6% floated over the past few weeks. Once the rule is proposed, it is then put out for comment and regulators might later adjust as necessary. The new requirement is expected to be a nonevent for the banks - many of which are already at that level and others which shouldn't have a problem tweaking things to get there. | 1 Comment
Jul. 2, 2013, 4:23 PMThe FDIC will introduce a draft of leverage limits for the big banks (XLF) on July 9. It's expected these could be as much as double (to 6%) what's required by Basel III, but it's also expected many large U.S. lenders are already above that level and the ones below shouldn't have an issue reaching it. 6% is also an upper limit - chances are the level comes in somewhere between 3-6%. | Comment!
Jul. 2, 2013, 12:28 PMBanks with a heavy reliance on mortgage originations catch a break with new capital rules approved by the Fed today. The central bank decided not to increase risk-weightings for mortgages, citing new underwriting rules as well as other pending rules as the reasons. Small banks also get good news as any trust preferreds issued prior to 2010 are grandfathered in as acceptable capital. | 2 Comments
Jun. 25, 2013, 11:58 AMLooking for relative strength? With the S&P 500 off nearly 5% since May's end and the big-cap focused Financial Sector SPDR (XLF) down 5%, the Regional Banking ETF (KRE) is about flat as higher rates hold the promise of better margins. Within the KRE, those stocks looking the best technically to Frank Zorilla are ASBC, BBT, MTB, HBAN, HOMB, RF, ZION. | 4 Comments
Jun. 21, 2013, 11:54 AMA check of the TBTFs finds Wells Fargo (WFC +0.9%) the only gainer amidst a floated report the Fed and FDIC are weighing a doubling in the "simple leverage ratio." Wells already exceeds the 6% proposed ratio, but presumably BofA (BAC -2.8%), JPMorgan (JPM -1.3%), Citigroup (C -4%), Goldman (GS -1.7%), and Morgan Stanley (MS -3.1%) would need to halt or pare back dividends and buybacks should the rule be implemented. The financial SPDR (XLF -1.4%). | 8 Comments
PGF vs. ETF Alternatives
The PowerShares Financial Preferred Portfolio (Fund) is based on the Wachovia Hybrid & Preferred Securities Financial Index (WHPSsm Financial Index) (Index). The Fund will normally invest at least 90% of its total assets in preferred securities that comprise the Index. The Index tracks the performance of U.S. listed preferred stocks of preferred stocks issued in the US market by financial institutions and currently includes approximately 30 securities selected by Wachovia pursuant to a proprietary selection methodology. The market-cap weighted Index is rebalanced monthly.
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