- Last Ratings Update:05/31/2014
- Price as of 05/31/2014 :$20.12
- Net Assets:$797.25 Million
- Peer Rank:124 of 280
- Investment Rating:B
We rate Flaherty & Crumrine Pref Sec Inc at B. Positive factors that influence this rating include a well above average total return, low price volatility and low expense structure. The fund invests approximately 4% of its assets in bonds and may be considered for investors seeking an Equity Income strategy.
POSITIVES AND RISKS
Total return ranks very high in comparison with peers over the last three years. The Flaherty & Crumrine Pref Sec Inc has returned an annual rate of 8.39% since inception. More recently, the fund has generated a total return of 26.51% in the last five years, 15.12% in the last three years, and 17.70% in the last year. How does that compare to other equity funds? In the last five years, it has outperformed 96% of them. It has also outpaced 79% of its competitors on a three year basis and 71% of them over the last year for the period ending 5/31/2014. On a year to date basis, FFC has returned 20.06%.
Downside risk has been below average. FFC has a draw down risk of -18.41%, which is the largest price decline experienced over the last three years. This fund has a three year standard deviation of 13.5%. This fund has had moderate volatility in its monthly performance over the last 36 months. As of 5/31/2014, the fund was trading at a price of $20.12, which is 1.0% below its 52-week high of $20.33 and 1.3% above its 52-week low of $19.86.
High expense ratio hinders performance. On total assets of $797.25 million, FFC maintains a high expense ratio compared to its Equity Income peers of 1.44% to cover all operating costs. Brokerage costs for the fund to buy and sell shares are not included in the expense ratio. As FFC is a closed end fund, it has no front end or back end load.
Manager tenure and performance record are net positives. Substandard fund managers tend to be replaced, so a long tenure is usually a good sign that a fund is achieving its objectives. The Flaherty & Crumrine Pref Sec Inc has been managed by Robert E. Chadwick for the last 11 years. Over that period, the manager was able to capture more actual gains in excess of the expected return than 92% of other fund managers.
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