Preferred Stocks Are In The Sweet Spot

We categorize alternative assets as non-correlated or hybrid assets that don’t always react to changes in the economy or interest rates in the same way that stocks or bonds do.

As a result, preferred stocks have been an excellent performance and income contributor this year, and we expect that they will likely remain a relatively low volatility opportunity for income investors.

One word of warning for new investors in ETFs such as PFF or PGX is to monitor the future price action carefully, and size your position appropriately given the general sense of risk in the market.

Conditions can change rapidly, and as we witnessed in 2013, preferred stocks can exhibit a good amount of volatility in changing interest rate landscapes.

If our analysis is correct, we should continue to see good relative performance, but always place discipline above conviction.

This article is brought to you courtesy of Michael Fabian from FMD Capital Management.

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