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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Preferred Stock ETFs: Beware the Heavy Concentration in Financials |
Seeking Alpha - May 12, 2011 - by Eric Parnell
This post is the latest in an ongoing series introduced in the article Best Post-QE2 Opportunities Lie Beyond Stocksproviding a detailed analysis on investment strategies outside of the stock market leading up to the end of QE2.
Preferred stocks are a tempting option for those investing for income. In an environment where savings rates are near zero and attractive yields are hard to come by, preferred stocks offer plump dividends that run north of 6.0% on average from companies that in many cases have investment grade credit ratings. And preferred stocks provide the added appeal of taking one step up the capital structure from the bottom rung of common stocks. This provides a degree of principal protection in the event of bankruptcy. Because of these advantages, investors may be inclined to consider adding a preferred stock ETF to their portfolio strategy. But because of the composition of the preferred stock universe, investors may be better served by bypassing ETFs and focusing on individual preferred stocks instead.
The primary issue with the preferred stock universe is that it is very heavily weighted to financials. A look at the composition of three of the largest preferred stock ETFs show just how heavily this segment is biased to financials:
iShares S&P U.S. Preferred Stock Index Fund (PFF) – 84.88% Financials
PowerShares Preferred Portfolio (PGX) – 87.65% Financials
SPDR Wells Fargo Preferred Stock ETF (PSK) – 82.98% Financials
As a result of this concentration, the performance of the preferred stock universe ends up being closely tied to that of the financial sector. And during the crisis several years ago, this close correlation resulted in an extreme level of volatility that stretched well beyond the comfort level of the typical income investor.
For the complete article.
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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