I examine instances of interconversion among FixedFloater / RatchetRate shares and conclude:
Interconvertability is an arcane nuance to preferred share investing, but can be used to boost returns on occasion. I expect the field to become more important as FixedResets become a more seasoned element of the preferred share investment universe and Strong Pairs, created at the first exchange date, become interconvertible at the second and successive exchange dates.
At the very least, when one has made a decision to invest in one element of a strong pair, the impact of interconversion should be examined, as it may be possible to buy the type of share that is not desired and convert to the desired element at a lower overall price.
This follows an an earlier look at the subject from the February, 2011, edition of PrefLetter
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