Part Stock, Part Bond: Preferred Dividends Could Be the Real Big Winners
Head of Fixed Income and Preferred Securities Bill Scapell spoke with Barron’s about why preferreds may be attractive for investors in the current environment and the differences between the exchange-listed and institutional preferred markets.
Please see important disclosures and risks below.
Please consider the investment objectives, risks, charges and expenses of any U.S. Registered open-end fund carefully before investing. A summary prospectus and prospectus containing this and other information may be obtained by calling 1-800-330-7348 or visiting the applicable fund page on the www.cohenandsteers.com website. Please read the prospectus carefully before investing.
Performance of Cohen & Steers Preferred Securities and Income Fund (CPXAX) as of September 30
|Period||Excluding Sales Charge||Including Sales Charge1||Linked Index||ICE BofA Fixed Rate Preferred Securities Index||S&P 500 Index|
|Since Inception (5/3/10)||5.83%||5.51%||5.11%||4.90%||11.39%|
Data quoted represents past performance, which is no guarantee of future results. Risk of loss is possible. Performance returns stated net of fees. Current performance may be lower or higher than the performance quoted. The investment return and the principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Periods greater than 12 months are annualized. Returns are historical and include change in share price and reinvestment of all distributions. An investor cannot invest directly in an index, and index performance does not reflect the deduction of fees, expenses or taxes. There is no guarantee that any investment objective will be achieved. There is no guarantee that any historical trend illustrated in this report will be repeated in the future, and there is no way to predict when such a trend will begin
(1) Maximum 3.75% sales charge; returns for other share classes will differ due to differing expense structures and sales charges.
Top 10 holdings as of September 30
|Name||Sectors||% of Market Value|
|Bp Capital Markets Plc Flt Perp||Energy||2.1 %|
|Bank of America 6.25%||Banking||1.6%|
|Bank of Amrica 6.10%||Banking||1.5%|
|Citigroup Inc Flt Perp||Banking||1.4%|
|Wells Fargo & Company Flt Perp||Banking||1.4%|
|Bnp Paribas 7.750% Flt Perp Sr:144A||Banking||1.3%|
|Transcanada Trust 5.875 08/15/76||Pipeline||1.3%|
|Scentre Group Trust 2 Flt 09/24/80 Sr:144A||Real Estate||1.2%|
|Credit Suisse Group Ag 9.750% Flt Perp Sr:144A||Banking||1.2%|
|JP Morgan 6.1%||Banking||1.1%|
The mention of specific securities is not a recommendation or solicitation to buy, sell or hold any particular security and should not be relied upon as investment advice. Weights may vary over time and holdings are subject to change without notice.
For more information on the fund, please click here or visit https://www.cohenandsteers.com/funds/preferred-securities-and-income-fund-fp/?symbol=CPXAX.
Please see important disclosures and risks below.
Data quoted represents past performance, which is no guarantee of future results.
There is no guarantee that any market forecast set forth in this article will be realized. There is no guarantee that any historical trend referenced herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. The mention of specific securities is not a recommendation or solicitation to buy, sell or hold any particular security and should not be relied upon as investment advice.
This article is for informational purposes and reflects prevailing conditions and our judgment as of the date of this material, which are subject to change. This material should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment. This material is not being provided in a fiduciary capacity and is not intended to recommend any investment policy or investment strategy or take into account the specific objectives or circumstances of any investor. We consider the information in this article to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of appropriateness for investment. Please consult with your investment, tax or legal professional regarding your individual circumstances prior to investing.
Risks of investing in preferred securities. There are special risks associated with investing in the Fund. All investments involve risks, including loss of capital, and there is no guarantee that investment objectives will be met. In general, the risks of investing in preferred securities are similar to those of investing in bonds, including credit risk and interest-rate risk. As nearly all preferred securities have issuer call options, call risk and reinvestment risk are also important considerations. In addition, investors face equity-like risks, such as deferral or omission of distributions, subordination to bonds and other more senior debt, and higher corporate governance risks with limited voting rights. An investment in the Fund is subject to investment risk, including the possible loss of the entire principal amount that you invest. The value of these securities, like other investments, may move up or down, sometimes rapidly and unpredictably. The Fund may invest in below-investment grade securities and unrated securities judged to be below investment-grade by the Advisor. Below-investment grade securities or equivalent unrated securities generally involve greater volatility of price and risk of loss of income and principal, and may be more susceptible to real or perceived adverse economic and competitive industry conditions than higher-grade securities. The Funds' benchmarks do no contain below investment-grade securities.
Contingent capital securities (sometimes referred to as "CoCos") are debt or preferred securities with loss absorption characteristics built into the terms of the security, for example a mandatory conversion into common stock of the issuer under certain circumstances, such as the issuer's capital ratio falling below a certain level. Since the common stock of the issuer may not pay a dividend, investors in these instruments could experience a reduced income rate, potentially to zero, and conversion would deepen the subordination of the investor, hence worsening the investor's standing in a bankruptcy. Some CoCos provide for a reduction in the value or principal amount of the security under such circumstances. In addition, most CoCos are considered to be high yield or "junk" securities and are therefore subject to the risks of investing in below investment-grade securities.
Cohen & Steers Capital Management, Inc. (Cohen & Steers) is a U.S registered investment advisory firm that provides investment management services to corporate retirement, public and union retirement plans, endowments, foundations and mutual funds.
Cohen & Steers U.S. registered open-end funds are distributed by Cohen & Steers Securities, LLC and are only available to U.S. residents.