Sheaff Brock Investment Advisors, LLC

chess-pieces



The Preferred Income portfolio is a fixed-income alternative using $25 par-value preferred stocks with the objective to generate income.

Preferred Income Strategy Overview

DESCRIPTION

The Sheaff Brock Preferred Income portfolio is an actively managed strategy with its primary objective to seek income. Sheaff Brock analyzes a wide variety of preferred types when managing the Preferred Stock portfolio. The Preferred Income portfolio invests in 20–25 preferred stocks that Sheaff Brock believes display high, steady, and consistent income. The portfolio can consist of several different types of preferreds, including cumulative preferred, callable preferred, adjustable-rate preferred, fixed-to-float preferred and trust preferred.

The primary objective of the Preferred Income portfolio:

  • Identify and invest in preferred securities that offer the opportunity to generate consistent income while seeking preservation of capital

INVESTMENT METHODOLOGY & PORTFOLIO CONSTRUCT

The initial screen for the Preferred Income portfolio:

One Preferred issues with a par value of 25

Two BB rating or better

Three Over $400mm outstanding (which translates into only 16 million shares per issue)

This initial screen produces about 300 preferred stocks that are analyzed, researched, and ranked by call date, credit rating, yield to call and, finally, liquidity. The end result is a universe of preferred-issue stocks that are suitable for investment.

The sell discipline includes an analysis of relative yield measurements, credit measurements, and the potential for the issue to be called. When the yield metrics fall below an acceptable level given credit quality and duration, the issue will be under consideration to be replaced in the portfolio.

If you'd like to learn more about the Sheaff Brock Preferred Income portfolio strategy, feel free to contact us.

Please click here to review Sheaff Brock disclosures about the portfolio strategy information provided.