Broad fixed income markets have seen a substantial wave of repricing this year stemming from persistent inflation, interest rate volatility, and concerns around economic growth.
However, we believe there are three dynamics in the market right now that make preferreds attractive: Higher current income levels, healthy issuer fundamentals, and preferreds’ historical tendency to rebound following significant drawdowns.
ABOUT THE AUTHORS
Allie Quine, CFA CFA, Vice President, is a member of Cohen & Steers’ Portfolio Specialist Group.
FURTHER READING
4 Reasons to own preferred securities today
We believe an exceptional buying opportunity for preferred securities may exist today, for several reasons: 1. Current discounts to par value represent uncommon value 2. High-quality preferreds offer some of the highest yields in fixed income 3. Performance historically has been strong following market corrections 4. An end of Fed rate hikes is a possible catalyst for price appreciation
Preferred securities: Resetting for a new cycle
Recent bank turbulence and the end of the Fed’s rate-hiking cycle create what we believe may be an exceptional buying opportunity for preferreds.
Three tax-smart income alternatives
Strategies with inherent tax efficiencies may help investors diversify sources of income and potentially keep more of what they earn.