Investment Executive had a piece on the preferred share market:
Since the preferred market is less liquid than some other types of fixed-income, “the capacity or the potential to outperform the benchmark is higher,” said the Montreal-based [Dynamic Funds’ Marc-André] Gaudreau [vice-president and senior portfolio manager of Dynamic Active Preferred Shares ETF.], whose ETF is one of the category’s best performers and has a five-star Morningstar rating.
Other actively managed funds that have outperformed their peer group include Global X Active Preferred, NBI Active Canadian Preferred Shares ETF and TD Active Preferred Share ETF.
“The other thing that’s very important is the flexibility in our mandate. We don’t have to be fully invested in the $25-par pref market in Canada,” Gaudreau said. “We can go to the U.S. We can go to the institutional preferred share market.” LRCNs and hybrids are also held in the Dynamic portfolio.
For his part, Fiera’s Normandeau is above market weight in rate-reset preferreds versus the fixed-rate perpetuals. Among the rate reset issues, he favours those with low- to mid-reset yields that are trading at discounts. These securities, along with having capital gains potential, are less likely to be called away by issuers.
The Global X portfolio also emphasizes high credit quality, Normandeau said. “In this environment right now, you’re not really paid to go to a weaker credit name.”
As it happens, I track all four of the active ETFs managed as part of my MAPF performance reporting – so you can check out how I did against them as of the end of September.
Thanks to Assiduous Reader A for bringing this to my attention!
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 6.63 % | 7.09 % | 20,992 | 13.39 | 1 | -0.9146 % | 2,428.3 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1018 % | 4,599.7 |
| Floater | 6.27 % | 6.57 % | 55,814 | 13.10 | 3 | 0.1018 % | 2,650.8 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1413 % | 3,670.2 |
| SplitShare | 4.76 % | 4.46 % | 64,684 | 3.30 | 5 | -0.1413 % | 4,383.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1413 % | 3,419.8 |
| Perpetual-Premium | 5.48 % | 4.93 % | 74,600 | 6.97 | 7 | 0.0283 % | 3,096.2 |
| Perpetual-Discount | 5.57 % | 5.62 % | 45,893 | 14.44 | 26 | 0.2874 % | 3,383.8 |
| FixedReset Disc | 5.98 % | 5.90 % | 108,421 | 13.82 | 30 | 0.0798 % | 3,055.0 |
| Insurance Straight | 5.45 % | 5.46 % | 54,908 | 14.57 | 22 | 0.5045 % | 3,338.8 |
| FloatingReset | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0798 % | 3,634.3 |
| FixedReset Prem | 5.65 % | 4.83 % | 128,935 | 2.77 | 22 | 0.0461 % | 2,625.9 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0798 % | 3,122.8 |
| FixedReset Ins Non | 5.22 % | 5.29 % | 58,545 | 14.66 | 15 | 1.6541 % | 3,068.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.K | Perpetual-Discount | -1.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 21.38 Evaluated at bid price : 21.65 Bid-YTW : 5.73 % |
| PWF.PF.A | Perpetual-Discount | 1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 20.51 Evaluated at bid price : 20.51 Bid-YTW : 5.51 % |
| FTS.PR.H | FixedReset Disc | 1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 18.70 Evaluated at bid price : 18.70 Bid-YTW : 5.57 % |
| MFC.PR.Q | FixedReset Ins Non | 1.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 23.54 Evaluated at bid price : 25.29 Bid-YTW : 5.20 % |
| IFC.PR.E | Insurance Straight | 1.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 23.79 Evaluated at bid price : 24.06 Bid-YTW : 5.44 % |
| GWO.PR.Y | Insurance Straight | 1.41 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 20.90 Evaluated at bid price : 20.90 Bid-YTW : 5.44 % |
| IFC.PR.F | Insurance Straight | 1.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 23.70 Evaluated at bid price : 24.00 Bid-YTW : 5.56 % |
| POW.PR.B | Perpetual-Discount | 1.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 23.53 Evaluated at bid price : 23.80 Bid-YTW : 5.65 % |
| BN.PR.N | Perpetual-Discount | 1.66 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 20.79 Evaluated at bid price : 20.79 Bid-YTW : 5.78 % |
| BN.PR.Z | FixedReset Disc | 1.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 23.44 Evaluated at bid price : 24.75 Bid-YTW : 5.71 % |
| GWO.PR.R | Insurance Straight | 2.93 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 21.55 Evaluated at bid price : 21.81 Bid-YTW : 5.55 % |
| BN.PR.M | Perpetual-Discount | 3.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 20.81 Evaluated at bid price : 20.81 Bid-YTW : 5.77 % |
| IFC.PR.A | FixedReset Ins Non | 29.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 21.36 Evaluated at bid price : 21.68 Bid-YTW : 5.11 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| FTS.PR.H | FixedReset Disc | 90,174 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 18.70 Evaluated at bid price : 18.70 Bid-YTW : 5.57 % |
| GWO.PR.Z | Insurance Straight | 50,500 | YTW SCENARIO Maturity Type : Call Maturity Date : 2034-09-30 Maturity Price : 25.00 Evaluated at bid price : 25.52 Bid-YTW : 5.50 % |
| NA.PR.C | FixedReset Prem | 35,200 | YTW SCENARIO Maturity Type : Call Maturity Date : 2027-11-15 Maturity Price : 25.00 Evaluated at bid price : 26.16 Bid-YTW : 4.44 % |
| IFC.PR.F | Insurance Straight | 30,500 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 23.70 Evaluated at bid price : 24.00 Bid-YTW : 5.56 % |
| POW.PR.H | Perpetual-Premium | 17,400 | YTW SCENARIO Maturity Type : Call Maturity Date : 2034-10-15 Maturity Price : 25.00 Evaluated at bid price : 25.54 Bid-YTW : 5.55 % |
| BN.PF.C | Perpetual-Discount | 14,842 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2055-10-20 Maturity Price : 20.91 Evaluated at bid price : 20.91 Bid-YTW : 5.86 % |
| There were 9 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| See TMX DataLinx: ‘Last’ != ‘Close’ and the posts linked therein for an idea of why these quotes are so horrible. | ||
| Issue | Index | Quote Data and Yield Notes |
| ENB.PF.E | FixedReset Disc | Quote: 21.55 – 22.90 Spot Rate : 1.3500 Average : 0.9033 YTW SCENARIO |
| PWF.PR.K | Perpetual-Discount | Quote: 21.65 – 23.00 Spot Rate : 1.3500 Average : 1.0081 YTW SCENARIO |
| BIP.PR.E | FixedReset Prem | Quote: 25.11 – 26.11 Spot Rate : 1.0000 Average : 0.6688 YTW SCENARIO |
| ELF.PR.F | Insurance Straight | Quote: 23.50 – 24.30 Spot Rate : 0.8000 Average : 0.5310 YTW SCENARIO |
| IFC.PR.C | FixedReset Ins Non | Quote: 23.96 – 25.00 Spot Rate : 1.0400 Average : 0.8445 YTW SCENARIO |
| TD.PF.J | FixedReset Prem | Quote: 25.46 – 26.05 Spot Rate : 0.5900 Average : 0.4366 YTW SCENARIO |