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:
INVESTMENT METHODOLOGY & PORTFOLIO CONSTRUCT
The initial screen for the Preferred Income portfolio:
One Identify quality preferred securities (both $25-par retail preferreds and $25- par bonds) and $1,000-par institutional preferred capital securities with sufficient liquidity.
Two Rank qualifying securities by duration, credit rating, yield to call, option-adjusted spread (OAS), and 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.