Lastly, the Fed's explicit guidance for 0% rates into 2013 has created a mad scramble for yield. Nearly half of the new 52-week highs on the NYSE are preferred-stock shares, including Public Storage preferred (PSA-PE), Gabelli Dividend & Income Trust preferred (GDV-PA) and Alabama Power preferred (ALP-PLN).
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.
Personally, I see J.P. Morgan Chase preferred shares as golden. Yet Merrill Lynch? With Bank of America receiving (requiring?) capital from Warren Buffett? 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 Constellation Energy (CEG-PA) and DTE Energy (DTE-PA). You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can follow me on Twitter @ETFexpert.
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