Invesco Preferred Portfolio ETF: A Hybrid For Extended Valuations

Summary

• Invesco Preferred Portfolio ETF is an ETF that holds fixed-rate preferred securities.
• The holdings comprise of leading companies in the US offering a high rate on coupon payments leading to a generous dividend yield for the fund.
• While the fund has a large portion invested in investment grade companies, exposure to speculative grade assets also form a part of its portfolio.
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An investment in knowledge pays the best interest. - Benjamin Franklin

The volatility in stock markets may not suit the appetite of many investors, and the low interest rates make debt instruments less attractive. For investors looking to strike a balance between these two asset classes, Invesco Preferred Portfolio ETF (NYSEARCA:PGX) may just be the most appropriate option. The fund offers investors with a very good yield and has exposure to names some of which can be considered "Too Big to Fail". Below will explain why investors should give the ETF a look in order to enhance their investment returns.

Underlying holdings of the ETF

In the table below we have summarized the exposure to different counterparties by their percentage holdings. The fund has instruments of 142 names and can, therefore, be considered as a highly diversified portfolio. The top 10 names contribute about 39% of the total fund value and are either investment grade or very close to it. The entire portfolio, in fact, has a rating profile similar to what is seen within the top 10 holding names.

Name	% Holdings	Rating
Wells Fargo & Co. (WFC)	7.34	BB+/Baa2
Bank of America Corp. (BAC)	5.92	BBB-/Baa3
JPMorgan Chase & Co. (JPM)	5.30	BBB-/Baa2
AT&T Inc. (T)	3.69	BB+/Ba1
Morgan Stanley (MS)	3.19	BB+/Ba1
Public Storage (PSA)	3.11	BBB+/A3
Capital One Financial Corp. (COF)	2.98	BB/Baa3
Citigroup Inc. (C)	2.62	BB+/Ba1
Southern Co./The (SO)	2.39	BBB/Baa3
Qwest Corp. (CTV)	2.33	BBB-/Ba2

Click to enlarge

Source: Invesco

The speculative ones in both rating categories are AT&T Inc. (T), Morgan Stanley (MS), and Citigroup Inc. (C). All of these companies are renowned names with a healthy cash balance and there should not be any difficulty in meeting their near-term obligations towards fixed income instruments.

	AT&T	Morgan Stanley	Citigroup
Cash

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This writing is for informational purposes only and Lead-Lag Publishing, LLC undertakes no obligation to update this article even if the opinions expressed change. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services in any jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Lead-Lag Publishing, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.