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Tag Archives: preferred stock

Mar 7, 2018

Low Volatility Effect in the U.S. Preferred Stock Market

The low volatility effect in equities refers to the findings that stocks that previously exhibited lower realized volatility outperform those with higher volatility as well as the broad based market on a risk-adjusted basis. It has been well documented in academic and practitioner research, and we have also seen widespread adoption in investment product offerings…


Feb 7, 2018

Can Realized Volatility Predict Future Volatility for Preferred Securities?

The investment community routinely uses historical realized volatility as an indicator of future volatility. One prominent example of this is the construction of ranking-based, low volatility equity strategies where realized volatility is used to form low volatility portfolios. Can the realized volatility of an asset indicate its future volatility? We extend the low volatility analysis…


Dec 20, 2017

A Quick Performance Check on U.S. Preferreds

There are only a couple weeks to go until the end of the year, and for a while now, the investing public has seen plenty of material supporting the benefits or risks of diversifying a portfolio through the use of preferred securities. This hybrid type product touts the benefits of high yields, steady income, and…


Apr 29, 2016

Preferences of Preferred Stock

Preferred stock is a hybrid security that has characteristics of both stocks and bonds.  In the capital structure, preferred shares are subordinate to bank loans and senior corporate bonds, but they are senior to common stock.  If a company had to file for bankruptcy and the assets of the company were liquidated, preferred shareholders would…


Dec 17, 2015

Floating Securities in Advance of Rising Rates

This Wednesday, the Fed announced that they would begin raising rates, a decision that has left many investors with questions about how they will fare in this changing environment.  Knowing that conventional, fixed-rate securities sometimes lose value when interest rates increase has some investors looking to floating-rate securities instead.  Floating-rate securities are designed to mitigate…


Mar 29, 2015

U.S. Preferred Stock: Equity & Bond Characteristics Helping or Hurting Performance?

In this prolonged low interest rate environment, the S&P U.S. Preferred Stock Index has performed well, returning 2.92% year-to-date.   Meanwhile, the S&P 500 (TR) is up a modest 0.6% and long term bonds tracked in the S&P/BGCantor 20+ Year U.S. Treasury Bond Index are up 4.53% in total return.  So far, the preferred stock market with characteristics of…


Aug 25, 2014

In Preferred Index, High Yield Is Heavier But Investment Grade Outperforms

Preferred securities as measured by the S&P U.S. Preferred Stock Index have returned 12.08% year-to-date.  The performance of this index has outpaced both the S&P U.S. Issued Investment Grade Corporate Bond Index (6.49%YTD) and the S&P U.S. Issued High Yield Corporate Bond Index (5.5% YTD). The recent development of three new sub-indices to the S&P…


May 16, 2014

Preferred Stock Returns 9.61% (TR)

The U.S. preferred stock market is exhibiting the qualities of the hybrid equity / bond like structure they are.  Through May 15th, 2014, the S&P U.S. Preferred Stock Index has recorded a year to date total return of 9.61% mirroring more the bond market than the stock market in this low rate environment.  The index…


Feb 3, 2014

The Power of Dividends: Preferred Stock

Similar to fixed income securities, the U.S. Preferred Stock market has started 2014 with positive performance. The S&P U.S. Preferred Stock Index  (Total Return) ended January 2014 up 2.68% .  A good start given the S&P 500 Index (Total Return) was down 3.46%.  As a fixed income comparison the S&P/BGCantor U.S. Treasury Bond  7-10 Year…


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