PGF: Financial Preferred Stocks Look Unattractive

seekingalpha08-11

Invesco Financial Preferred ETF focuses on preferred stocks of financials companies.PGF shows a 2-digit decrease in both price and distributions over the last 10 years.PGF concentration in banks seems...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2458695314?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/171297516/image_171297516.jpg","is_english":true,"pubTime":"2024-08-11 20:31","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2458695314","market":"us","top_or_hot":-1,"title":"PGF: Financial Preferred Stocks Look Unattractive","media":"seekingalpha","content":"<div>\n<p>Invesco Financial Preferred ETF focuses on preferred stocks of financials companies.PGF shows a 2-digit decrease in both price and distributions over the last 10 years.PGF concentration in banks seems...</p>\n\n<a href=\"https://seekingalpha.com/article/4713485-pgf-financial-preferred-stocks-look-unattractive\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>PGF: Financial Preferred Stocks Look Unattractive</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPGF: Financial Preferred Stocks Look Unattractive\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-11 20:31 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4713485-pgf-financial-preferred-stocks-look-unattractive><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Invesco Financial Preferred ETF focuses on preferred stocks of financials companies.PGF shows a 2-digit decrease in both price and distributions over the last 10 years.PGF concentration in banks seems...</p>\n\n<a href=\"https://seekingalpha.com/article/4713485-pgf-financial-preferred-stocks-look-unattractive\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0320765646.SGD","symbol_name":"FTIF - Franklin Income A MDIS SGD-H1","start_time":0,"source_url":"https://seekingalpha.com/article/4713485-pgf-financial-preferred-stocks-look-unattractive","article_id":"2458695314","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/171297516/image_171297516.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2458695314","pubTimestamp":1723379479,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Invesco Financial Preferred ETF focuses on preferred stocks of financials companies.PGF shows a 2-digit decrease in both price and distributions over the last 10 years.PGF concentration in banks seems","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","PGX":"优先股指数ETF-PowerShares","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","LU0310800965.SGD":"FTIF - Templeton Global Balanced A Acc SGD","LU0251142724.SGD":"Fidelity America A-SGD","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","LU0106831901.USD":"贝莱德世界金融基金A2","BK4534":"瑞士信贷持仓","LU0175139822.USD":"AB FCP I Global Equity Blend A USD","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","LU0683600562.USD":"AB SELECT US EQUITY \"A\" (USD) ACC","LU2236285917.USD":"ALLIANZ GLOBAL INCOME \"AMG\" (USD) INC","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","LU0289960550.SGD":"AB FCP I - GLOBAL EQUITY BLEND PORTFOLIO 'A' (SGD) ACC","LU0225283273.USD":"SCHRODER ISF GLOBAL EQUITY ALPHA \"A\" (USD) ACC","FDN":"First Trust Dow Jones Internet I","LU0787776722.HKD":"AB SELECT US EQUITY PORTFOLIO \"A\" (HKD) ACC","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","BK4559":"巴菲特持仓","LU0477156953.USD":"HARRIS ASSOCIATES US VALUE EQUITY \"RE\" (USD) ACC","BK4550":"红杉资本持仓","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","LU1035773651.USD":"AB SICAV I - GLOBAL VALUE PORTFOLIO \"AD\" (USD) INC","LU0149725797.USD":"汇丰美国股市经济规模基金","LU0251131958.USD":"FIDELITY AMERICA \"A\" (USD) ACC","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","BK4207":"综合性银行","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","LU1069347547.HKD":"AB SICAV I - GLOBAL VALUE PORTFOLIO \"AD\" (HKD) INC","IE00B7SZLL34.SGD":"Legg Mason ClearBridge - Value A Acc SGD-H","LU0162691827.USD":"BGF US BASIC VALUE \"A4\" INC","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","LU1791807156.HKD":"BGF WORLD FINANCIALS \"A2\" (HKDHDG) ACC","PFXF":"VanEck Preferred Securities ex Financials ETF","BK4582":"ESG ETF-MSCI","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","PGF":"优先金融股指数ETF-PowerShares","BK4127":"投资银行业与经纪业","LU0208291251.USD":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) INC","LU0130517989.USD":"HARRIS ASSOCIATES US VALUE EQUITY \"R\" INC","LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","LU1267930227.SGD":"TEMPLETON GLOBAL BALANCED \"AS\" (SGD) ACC A","PFF":"优先股指数ETF-iShares S&P","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","LU0267386448.USD":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC","LU0072461881.USD":"BGF US BASIC VALUE \"A2\" ACC"},"translate_title":"PGF：金融优先股看起来没有吸引力","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"PGX":1,"PGF":1,"PFXF":1,"PFF":1,"FDN":0.9},"content_text":"Invesco Financial Preferred ETF focuses on preferred stocks of financials companies.PGF shows a 2-digit decrease in both price and distributions over the last 10 years.PGF concentration in banks seems to be an additional factor of risk, as it has underperformed a preferred stocks ETF excluding financials.   stocknshares Since my latest review in January, PGF is close to flat in price and gained 4% in total return, not much better than a bond benchmark (BND +3.8%) and significantly behind a stock benchmark (SPY +11.2%). This article renews my “Sell” rating due to continued underperformance and unattractive updated data. PGF strategy Invesco Financial Preferred ETF (NYSEARCA:PGF) started investing operations on 12/01/2006 and tracks the ICE Exchange-Listed Fixed Rate Financial Preferred Securities Index. It has 93 holdings, a distribution yield of 6.23% and a total expense ratio of 0.56%. Distributions are paid monthly. Preferred stocks have priority over common stocks in the payment of dividends and proceeds of liquidation, but are generally junior to debt and do not carry voting rights. They are considered hybrid assets and their price behavior is between stocks and bonds. As described in the prospectus by Invesco, the fund invests in fixed rate U.S. dollar denominated preferred stocks without maturity date (perpetual) issued in the U.S. domestic market by financial companies. Eligible securities must be rated at least B3 by Moody’s or B- by S&P, pay distributions as “qualified dividend income” and meet some requirements such as minimum outstanding amount and liquidity. The index is capital-weighted and rebalanced on a monthly basis. The portfolio turnover rate in the most recent fiscal year was 15%.  PGF portfolio  About 65% of assets has an investment grade rating, although at the lower end (BBB).   Credit risk profile based on S&P rating (Chart: author, data: Invesco) The next table lists the top 10 issuers, representing 61% of asset value. Each of them has several securities in PGF portfolio.   Issuer Common stock Weight %   JPMorgan Chase & Co. JPM 11.28   $Bank of America Corp(BAC-N)$. BAC 10.04   Morgan Stanley MS 7.92   Wells Fargo & Co. WFC 6.55   $Capital One Financial Corp(COF-N)$. COF 4.64   Athene Holding Ltd.   4.54   Allstate Corp. ALL 4.28   U.S. Bancorp USB 4.05   KeyCorp KEY 3.99   MetLife, Inc. MET 3.68   Click to enlarge Four major banks represent 40.1% of asset value, each of them weighting between 6.5% and 11.3%: JPMorgan Chase, Bank of America, Morgan Stanley and Wells Fargo. Performance Since inception, PGF has lagged a 50/50 stock and bond benchmark by 3.5% in annualized return (including distributions). Moreover, it shows a much higher risk measured in volatility and maximum drawdown.     Total Return Annual.Return Drawdown Sharpe ratio Volatility   PGF 80.63% 3.40% -75.69% 0.2 18.91%   50% SPY + 50% BND 225.05% 6.90% -28.65% 0.68 8.66%   Click to enlarge The share price has lost about 40% since inception, as plotted on the next chart. In the same time, the cumulative inflation was over 50%, based on the Consumer Price Index. It represents a very large loss in inflation-adjusted value for shareholders.   PGF share price return (Seeking Alpha) Distribution history is also underwhelming. The annual sum of distributions went down from $1.12 per share in 2013 to $0.90 in 2023. For shareholders, this is a decrease in income stream of 19.6% in 10 years, while the cumulative inflation was over 30% in the same time.   PGF distribution history (Seeking Alpha) PGF vs competitors The next table compares characteristics of PGF and three popular preferred stocks ETFs:  VanEck Preferred Securities ex Financials ETF (PFXF) iShares Preferred and Income Securities ETF (PFF) Invesco Preferred ETF (PGX)      PGF PFXF PFF PGX   Inception 12/1/2006 7/16/2012 3/26/2007 1/31/2008   Expense Ratio 0.56% 0.41% 0.46% 0.50%   AUM $913.40M $1.73B $14.42B $4.33B   Avg Daily Volume $2.23M $8.56M $109.02M $35.68M   Yield TTM 6.27% 7.43% 6.35% 6.00%   Div. Growth 5 Yr CAGR -1.32% 4.08% -0.75% -2.76%   Click to enlarge PGF has the highest fee in this list. The next chart plots total returns, starting on 7/17/2012 to match all inception dates. PGF has lagged the ex-financials ETF by 12.6% and is close to the two funds covering all sectors.   PGF vs. Competitors, total return since 7/17/2012 (Seeking Alpha) These funds have lost between 14% and 20% in value in 12 years. In fact, none of them looks really compelling.   PGF vs. Competitors, price return since 7/17/2012 (Seeking Alpha) PGF is leading the pack by a very short margin over the last 12 months:   PGF vs. Competitors, 12-month total return (Seeking Alpha) Takeaway PGF reports a 2-digit decrease in both price and distributions over the last 10 years, while inflation was over 30%. PGF concentration in banks seems to be an additional factor of risk, as it has underperformed a competitor excluding financials. PGF may be an interesting trading instrument to capture market anomalies, but it looks unattractive as a long-term investment.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2458695314"}