explicit guidance for 0% rates into 2013 has created a mad scramble for yield. Nearly half of the new 52-week highs on the
are preferred-stock shares, including
Gabelli Dividend & Income Trust
preferred (GDV-PA) and
Although there are three suitable ETFs for an aggregate ETF for the preferred-shares space, the same dilemma that existed in 2008 exists in 2011: Roughly 75% of all preferred shares come from the financial company arena.
For instance, sift through the top holdings of the
iShares Preferred ETF
and you will find issuers such as
JP Morgan Chase
Personally, I see J.P. Morgan Chase preferred shares as golden. Yet Merrill Lynch? With Bank of America receiving (requiring?) capital from
? And German bank exposure to European sovereign debt doesn't make me fawn over Deutsche Bank.
In essence, with so much exposure to financial companies, you may not want to put up with the volatility of a preferred-stock ETF at this time. Individual preferred issues that yield hunters may like include utilities like
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