ETF Spotlight: PowerShares Preferred Portfolio
Tom Lydon
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Wed, Jul 27, 2011
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PGX vs. ETF Alternatives
PGX Description
The PowerShares Preferred Portfolio (Fund) is based on The BofA Merrill Lynch Core Fixed Rate Preferred Securities Index (Index). The Fund will normally invest at least 90% of its total assets in securities that comprise the Index. The Index is designed to replicate the total return of a diversified group of investment-grade preferred securities. (Securities must be investment-grade, based on an average of three leading ratings agencies: Moody's, S&P and Fitch). The Index is rebalanced on a monthly basis.
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Country: United States
Key Info
- In Your Portfolio: Financial Sector ETFs, A Guide to Dividend ETFs
- Asset Class Performance: Dividends
- All
- | Earnings
- | Dividends
- | M&A
- | On the move
- Wednesday, June 12, 3:22 PM Preferred stock indexes just don't move this much, but the last few sessions' quick decline in the Preferred Stock Index Fund (PFF -1.3%) has left it trading at a slight discount to NAV. Peter Tchir calls it "spiral risk," and it's there when illiquid underlying assets meet a "beta" vehicle meet a crowded trade (and a few more conditions). When does it end? Often after a capitulation day. The Financial Preferred ETF (PGF -1.2%) also takes a hit. 7 Comments [Financials]
- Tuesday, June 11, 2:44 PM The "ETF bid" in which indexed parts of the high-yield bond market (likely to be owned by HYG and JNK) rise faster than the rest when times are good works in reverse too as May saw the ETFs decline far more than NAV. What about for preferred shares? Investors pulled a relatively modest $300M from the $12B PFF in May and the fund was down 2.8%, but it's off another 1.6% since. "It stands to reason the same yield-seeking investors dumping HYG (and REM) are turning on PFF too," writes Brendan Conway. 3 Comments
- Saturday, May 4, 8:43 AM Do you know what's in your preferred stock ETF? The PowerShares Financial Preferred Portfolio (PGF) has nearly all holdings in perpetual preferreds - fixed yields with no maturity dates, thus particularly vulnerable to rising rates. The iShares Preferred Stock ETF (PFF) has just 45%. Mutual preferred funds, though more expensive, might offer even better protection against higher rates - they're able to participate in the OTC market where much of the action in floating-rate preferreds takes place. 4 Comments
- Wednesday, February 13, 7:14 PM First Trust's new actively managed Preferred Securities and Income ETF FPE began trading Tuesday. FPE tries to generate income through holding preferred securities and income-producing debt securities, such as corporate bonds, high-yield securities and convertibles. This gives investors yield-generating options as an alternative route to the low interest rates in Treasury bonds. FPE comes with a high expense ratio of 0.85% compared to PFF (0.48%), PFXF (0.40%), SPFF (0.58%), PSK (0.45%), PGX (0.50%) and IPFF (0.55%). (PR) 1 Comment
- Sunday, January 6, 8:56 AM While the preferred stock (PFF) led the income pack in 2012 with a total return of 18.2%, the current risk-reward profile isn't great, says Barclays' Shobhit Gupta, with the upside capped by the issuer call option, and significant downside if rates rise. One overlooked class for investors: Convertible Bonds (CWB). Barron's overview of the income sector. 26 Comments [Quick Ideas]
- Friday, November 16, 2012, 9:48 AM Another blow against the income-seekers, Capital One (COF) announces it will redeem $3.65B of trust preferred securities. The high-cost paper is in the process of being called by most financials as it will no longer by allowed to count towards capital buffers. (PR) 3 Comments [Financials]
- Wednesday, November 14, 2012, 4:26 PM Where'a an income investor to turn? Citigroup (C) calls away another series of trust preferred securities, these the 7.875% Enhanced TRUPS. Banks have been busily redeeming this high-cost paper as new rules no longer allow it to be counted in capital calculations. (PR) 1 Comment [Financials]
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Monday, October 22, 2012, 1:07 PM
"The fundamentals haven't changed, but the prices certainly have," says fund manager Mark Egan, explaining why he recently sold Bank of America (BAC) bonds yielding 3% that he had picked up last year when they were yielding 8%. He notes the great balance sheets of the financials mean good times for bondholders, but not so much for the owners of the common stock.
6 Comments [Financials, Quick Ideas] - Friday, October 12, 2012, 3:18 PM Don't say you weren't warned. Seventy-five percent of the preferred market is trading above par, according to BAML, and nearly the entire market is callable. 3 Comments [Financials]
- Tuesday, October 9, 2012, 11:31 AM Preferred stock investors aren't happy about banks buying back their trust preferred shares before the call date and often at face value (despite them trading at premiums), but new capital rules - "a capital treatment event" - allow the lenders to do so. Bank of America (BAC), says JPMorgan's Vivek Juneja, is likely to see the biggest benefit to its bottom line. 11 Comments [Financials]
- Thursday, September 27, 2012, 3:18 PM Despite preferred stocks having had a great run relative to Treasurys this year, Michael Gayed sees plenty more upside. The ratio of the preferred share ETF (PFF) to the long Treasury ETF (TLT) has moved up, but has a long way to go before getting near the levels of just 18 months ago. Comment! [Quick Ideas]
- Monday, August 20, 2012, 3:49 PM The hunt for yield: A JPMorgan (JPM) plan to issue $500M in preferred stock is scrapped in favor of a $1.1B sale. The shares were priced to yield 5.5% vs. an expected range of 5.5-5.625%. The bank wrote last week (via Michael Sedacca) it was seeing evidence the search for yield was spilling over into dividend/preferred stocks. Indeed. 5 Comments [Financials]
- Tuesday, August 14, 2012, 11:51 AM Yield-hungry investors grasping for supply get some, Capital One (COF) raising the amount of a preferred stock sale to $875M from $250M originally planned. The coupon is 6% and the issue is callable in 5 years. Comment! [Financials]
- Monday, August 6, 2012, 5:08 PM Huntington Bancshares (HBAN) announces the redemption of $114M of trust preferred securities, the latest in a series of banks doing same as they can no longer be counted as capital. The moves have left preferred stock investors scrambling to replace the fat (and safe) yielders, pushing up the prices on what's left in the preferred arena. Preferred stocks (PFF) have smoked the Dow YTD even before dividends. 2 Comments [Financials]
- Wednesday, July 18, 2012, 11:07 AM Preferred stock ETF investors frustrated by most funds' heavy exposure to financials have an alternative in Van Eck's just-launched PFXF. The fund attempts to mirror the performance of the Wells Fargo Hybrid and Preferred Securities ex-Financials Index. Comment! [Quick Ideas]
- Tuesday, July 17, 2012, 3:03 PM Preferred stock investors (PFF) - currently in the enviable position of earning a sweet return as the supply of available shares dwindles - get another fund to choose from with the launch of the Global X SuperIncome Preferred ETF (SPFF), set up to track an S&P Index of the highest yielding preferreds in the U.S. and Canada. Comment! [Financials]