Thought Leadership

Opportunities in Preferred Securities: Income Enhancement in a Low Yield Environment

June 23, 2017

In this commentary, Brian Meaney, our Vice President and Portfolio Manager for Fixed Income Investments, reviews the market for preferreds and discusses their potential to enhance investor portfolios.

Commentary Highlights:

  • In today’s environment of low yields and tight credit spreads, preferred securities present an opportunity to supplement income-focused strategies and may enhance after-tax total return. 
     
  • We believe that investors can enhance yield by investing in lower debt seniority levels of high quality companies. With spreads at the tighter end of their range and our positive view on bank fundamentals, we believe that preferreds are well-positioned in the current market. 
     
  • Due to vastly different investor bases for the two main types of preferreds, active managers seek to capitalize on price differences between them, with the goal to increase value for investors.

Please click here to read the commentary.