5 December 2024: Wealth Product Ideas
The Preferred Position: Capturing Yield & Stability in 2025
1. The Preferred Advantage: Current Market Sweet Spot
Market Leadership
- Record performance in 2024: 23% surge in Preferred Securities Index
- Outperformance driven by dual catalysts: falling rates and strong credit fundamentals
- Strategic positioning between fixed income and equities providing unique advantages
- Higher yields versus traditional investment-grade bonds (avg. 150-200bps premium)
- Priority claim on dividends and assets versus common equity
2. Macro Tailwinds Creating Sustained Opportunity
Rate Environment
- Fed pivot creating supportive backdrop (rates declined from 4.98% to 3.63%)
- Inflation moderation (CPI at 2.4%) supporting monetary easing trajectory
- Rate sensitivity becoming a positive driver of returns
- $2.8B institutional flows validating strategic timing
- Duration exposure offering potential capital appreciation
3. Strong Credit Fundamentals Underpinning Security
Credit & Quality Metrics
- Corporate balance sheets at historic strength levels
- High-yield spreads at 2.80, tightest since 2007
- Default rates down 47% to $15.7B from peak
- Bank stress tests confirming robust capital positions
- Investment-grade focus providing defensive characteristics
Fund Name (Ticker) |
|
Description |
|
Asset Class | Fixed income |
30-Day Average Volume (as of 3 Dec) | 753,698 |
Net Assets of Fund (as of 3 Dec) | $2,447,932,900 |
12-Month Yield (as of 3 Dec) | 6.34% |
P/E Ratio | N/A |
P/B Ratio | N/A |
Expense Ratio (Annual) | 0.23% |
Top 10 Holdings
(as of 3 December 2024)
(Source: Bloomberg)
Fund Name (Ticker) |
|
Description |
|
Asset Class | Equity |
30-Day Average Volume (as of 2 Dec) | 4,330,263 |
Net Assets of Fund (as of 3 Dec) | $15,175,633,552 |
12-Month Yield (as of 31 Oct) | 6.16% |
P/E Ratio (as of 2 Dec) | 16.49 |
P/B Ratio (as of 2 Dec) | 1.49 |
Expense Ratio (Annual) | 0.46% |
Top Holdings
(as of 2 December 2024)
(Source: Bloomberg)
