BMO S&P/TSX Laddered Preferred

ZPR-T

Analysis and Opinions about ZPR-T

Signal
Opinion
Expert
BUY
BUY
December 3, 2015

Laddered preferred shares. This is not a bad way to enter the preferred share market. It is one of the fastest growing BMO ETFs today. This one is only investing in the very short end of the curve, resetting within 5 years. Government cuts in short term interest rates have impacted this one. He thinks the rates won’t go any further down in Canada.

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Laddered preferred shares. This is not a bad way to enter the preferred share market. It is one of the fastest growing BMO ETFs today. This one is only investing in the very short end of the curve, resetting within 5 years. Government cuts in short term interest rates have impacted this one. He thinks the rates won’t go any further down in Canada.

Ben Cheng

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Price
$10.000
Owned
Unknown
COMMENT
COMMENT
December 2, 2015

He generally does not like preferred shares. You are getting the yield of a bond and the risk of a stock. However, he has actually been buying a little of this. Yields are very attractive.

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He generally does not like preferred shares. You are getting the yield of a bond and the risk of a stock. However, he has actually been buying a little of this. Yields are very attractive.

HOLD
HOLD
November 24, 2015

This gives great diversification with a higher dividend and gives you instant diversification with hundreds of preferred shares. He likes the ladder component. As interest rates rise, you are going to have shares redeemed and invested at a higher rate. However, as interest rates have stayed lower longer than expected, we are now starting to get resets at a much lower level. Preferreds have come under tremendous pressure. Probably overdone in the short term and have gone down to very low values.

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This gives great diversification with a higher dividend and gives you instant diversification with hundreds of preferred shares. He likes the ladder component. As interest rates rise, you are going to have shares redeemed and invested at a higher rate. However, as interest rates have stayed lower longer than expected, we are now starting to get resets at a much lower level. Preferreds have come under tremendous pressure. Probably overdone in the short term and have gone down to very low values.

COMMENT
COMMENT
October 21, 2015

There are basically 2 types of preferred shares. Perpetuals and resets. One goes on with the same yield forever and on the other the rates are reset periodically. In January they all got clobbered because Bank of Canada cut the rates and the companies reset at a lower rate. Actually this is a pretty good time to be buying these. This one yields about 5.25%. He likes this.

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There are basically 2 types of preferred shares. Perpetuals and resets. One goes on with the same yield forever and on the other the rates are reset periodically. In January they all got clobbered because Bank of Canada cut the rates and the companies reset at a lower rate. Actually this is a pretty good time to be buying these. This one yields about 5.25%. He likes this.

John Hood

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Price
$10.690
Owned
Unknown
BUY
BUY
August 10, 2015

The reset prefereds they hold are linked to 5 year Canada bonds. There is indiscriminant selling from retail investors that are scared. He thinks you have to stick with it.

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The reset prefereds they hold are linked to 5 year Canada bonds. There is indiscriminant selling from retail investors that are scared. He thinks you have to stick with it.

BUY
BUY
June 15, 2015

Preferred shares reset to the 5 year government of Canada bond. In a falling interest rate environment you get better performance from perpetual preferreds rather than from reset preferreds.

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Preferred shares reset to the 5 year government of Canada bond. In a falling interest rate environment you get better performance from perpetual preferreds rather than from reset preferreds.

BUY
BUY
May 13, 2015

Decent dividend. Preferred shares have been out of favour since 2008. This ETF is recovering and will continue to do so. The tax advantages to dividends are far higher than for bonds. He does not see a lot of risk. He prefers this to the bond market.

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Decent dividend. Preferred shares have been out of favour since 2008. This ETF is recovering and will continue to do so. The tax advantages to dividends are far higher than for bonds. He does not see a lot of risk. He prefers this to the bond market.

COMMENT
COMMENT
April 20, 2015

These reset preferreds are linked to the 5 year bond. So when the reset provisions come into play, if the bond yield is much lower, then the new coupon payment is going to be a lot less on the preferreds. They are more linked to fixed income than they are to equities. So if equity markets fall 10% on a correction, preferreds might fall 1%-2%, or sometimes they might go up depending on what is happening to interest rates at the time. They are a good diversifier because of this to get yield. He uses it by increasing his preferred exposure versus common. For example ZDV-T is the way to play high dividends in the Canadian market, which is 50 of the best dividend payers. When he fears the risk on the common shares, he wants a little more exposure to ZPR and when he feels the outlook is more for growth, he wants more ZDV. Meanwhile they both yield him more than 4% and it is a nice way to get Canadian tax efficient dividends in your taxable portfolio.

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These reset preferreds are linked to the 5 year bond. So when the reset provisions come into play, if the bond yield is much lower, then the new coupon payment is going to be a lot less on the preferreds. They are more linked to fixed income than they are to equities. So if equity markets fall 10% on a correction, preferreds might fall 1%-2%, or sometimes they might go up depending on what is happening to interest rates at the time. They are a good diversifier because of this to get yield. He uses it by increasing his preferred exposure versus common. For example ZDV-T is the way to play high dividends in the Canadian market, which is 50 of the best dividend payers. When he fears the risk on the common shares, he wants a little more exposure to ZPR and when he feels the outlook is more for growth, he wants more ZDV. Meanwhile they both yield him more than 4% and it is a nice way to get Canadian tax efficient dividends in your taxable portfolio.

COMMENT
COMMENT
April 13, 2015

He has a position of this and it has been doing horribly. The reset preferreds link to the five-year Canada bond. At about the $13.40 point, the Gov of the Bank of Canada surprised every analyst and every portfolio manager in Canada by doing a rate cut. Because of this, the five-year Canada bond plummeted in weeks. It stabilized for a while and he started adding, but it now seems to be in a panic phase where individual investors are selling these holdings. Institutional investors, from what he hears, are buying on the other side of this. He still holds his. It is a fine way to diversify.

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He has a position of this and it has been doing horribly. The reset preferreds link to the five-year Canada bond. At about the $13.40 point, the Gov of the Bank of Canada surprised every analyst and every portfolio manager in Canada by doing a rate cut. Because of this, the five-year Canada bond plummeted in weeks. It stabilized for a while and he started adding, but it now seems to be in a panic phase where individual investors are selling these holdings. Institutional investors, from what he hears, are buying on the other side of this. He still holds his. It is a fine way to diversify.

DON'T BUY
DON'T BUY
April 13, 2015

Preferred shares have been really hit lately. He has never been a fan of preferreds. You are getting a return of bonds and the risk of stocks.

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Preferred shares have been really hit lately. He has never been a fan of preferreds. You are getting a return of bonds and the risk of stocks.

John Hood

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Price
$12.160
Owned
Unknown
WEAK BUY
WEAK BUY
April 6, 2015

Laddered Preferred ETF. It is similar to the 5-year government of Canada rate because of the preferred resets. He looks at these as a way to diversify, but if interest rates go down in Canada it will suffer.

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Laddered Preferred ETF. It is similar to the 5-year government of Canada rate because of the preferred resets. He looks at these as a way to diversify, but if interest rates go down in Canada it will suffer.

COMMENT
COMMENT
March 17, 2015

Some people like Preferreds in a ladder, but that is not his preferred way of doing it. Most people don’t think of a ladder as being that important.

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Some people like Preferreds in a ladder, but that is not his preferred way of doing it. Most people don’t think of a ladder as being that important.

BUY
BUY
March 9, 2015

Preferreds have their place in everyone’s portfolio. You could have 5 to 15% depending on your outlook on preferred shares. He uses them in his sleep at night portfolio.

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Preferreds have their place in everyone’s portfolio. You could have 5 to 15% depending on your outlook on preferred shares. He uses them in his sleep at night portfolio.

HOLD
HOLD
February 23, 2015

Preferred resets trading off the 5 year bank of Canada. He owns ZPR-T. These are a hybrid between fixed income and equities. Just hold the ETF and collect the yield.

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Preferred resets trading off the 5 year bank of Canada. He owns ZPR-T. These are a hybrid between fixed income and equities. Just hold the ETF and collect the yield.

BUY
BUY
February 2, 2015

Preferred Resets. They benchmark off the 5 year Bank of Canada bond which dropped off last week. It should begin to recover in the next few weeks.

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Preferred Resets. They benchmark off the 5 year Bank of Canada bond which dropped off last week. It should begin to recover in the next few weeks.

COMMENT
COMMENT
December 30, 2014

He likes that this doesn’t have any of the perpetuals. On any of the ones they have, the dividends can be reset. The problem with perpetuals is that when rates go up, you are going to get clobbered.

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He likes that this doesn’t have any of the perpetuals. On any of the ones they have, the dividends can be reset. The problem with perpetuals is that when rates go up, you are going to get clobbered.

John Hood

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Price
$13.900
Owned
Unknown
COMMENT
COMMENT
October 31, 2014

The one thing about this is that it doesn't have Perpetuals in it. The perpetuals are the ones where it is a fixed rate, and they're very subject to interest rate changes. He has recommended this in the past. It is a good one.

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The one thing about this is that it doesn't have Perpetuals in it. The perpetuals are the ones where it is a fixed rate, and they're very subject to interest rate changes. He has recommended this in the past. It is a good one.

DON'T BUY
DON'T BUY
June 10, 2014

He likes preferred ETFs even less than the bond ETFs. ETFs work well when you have a very liquid market. However, preferreds are not liquid, so you will see these ETFs always lag the benchmark, because they are basically trading after the benchmark makes its changes. They do poor execution when they do their big swings. Basically you are paying a fee for subpar performance.

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He likes preferred ETFs even less than the bond ETFs. ETFs work well when you have a very liquid market. However, preferreds are not liquid, so you will see these ETFs always lag the benchmark, because they are basically trading after the benchmark makes its changes. They do poor execution when they do their big swings. Basically you are paying a fee for subpar performance.

Joey Mack

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Price
$14.170
Owned
Unknown
COMMENT
COMMENT
May 16, 2014

Preferred ETF recommendation? He likes this one. The problem with preferreds is that you get the ones that have a perpetual rate return, and in a volatile interest-rate market, you can get killed. This one does not have the perpetuals.

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Preferred ETF recommendation? He likes this one. The problem with preferreds is that you get the ones that have a perpetual rate return, and in a volatile interest-rate market, you can get killed. This one does not have the perpetuals.

John Hood

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Price
$14.420
Owned
Unknown
BUY
BUY
April 21, 2014

Preferred Share ETF. There is a new variety in Preferreds called ‘Rate Reset’. These are the best in rising interest rates, although they don’t make you immune to them. ZPR is a laddered reset preferred and would be the best one to use.

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Preferred Share ETF. There is a new variety in Preferreds called ‘Rate Reset’. These are the best in rising interest rates, although they don’t make you immune to them. ZPR is a laddered reset preferred and would be the best one to use.

DON'T BUY
DON'T BUY
February 24, 2014

Charges more fees to buy a smaller portion of the market.

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Charges more fees to buy a smaller portion of the market.

Joey Mack

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Price
$13.980
Owned
Unknown
COMMENT
COMMENT
January 7, 2014

Preferred shares pull back with rising interest rates. For clients that want fixed incomes, she has put them into preferred shares, but that is really 20% of an overall portfolio because preferred shares tend to be less liquid. She would not recommend more than 20%-25% of preferred shares in any portfolio. Her preference is still preferred shares, over bonds or perpetuals. Rate Resets are better and Retractables are even better but there aren’t many Retractables out there.

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Preferred shares pull back with rising interest rates. For clients that want fixed incomes, she has put them into preferred shares, but that is really 20% of an overall portfolio because preferred shares tend to be less liquid. She would not recommend more than 20%-25% of preferred shares in any portfolio. Her preference is still preferred shares, over bonds or perpetuals. Rate Resets are better and Retractables are even better but there aren’t many Retractables out there.

HOLD
HOLD
December 18, 2013

These are preferreds that are maturing each year for the next 5 years. As one matures today, another one is bought 5 years out. A lot of these are rate-resets and some of them have not been reset, which means that have been redeemed, which is probably a good thing. On the Federal Reserve talk in August about tapering created a spike up in the 10 year treasury. That caused a lot of interest-bearing securities to come off. Still likes this very much. 4.66% yield.

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These are preferreds that are maturing each year for the next 5 years. As one matures today, another one is bought 5 years out. A lot of these are rate-resets and some of them have not been reset, which means that have been redeemed, which is probably a good thing. On the Federal Reserve talk in August about tapering created a spike up in the 10 year treasury. That caused a lot of interest-bearing securities to come off. Still likes this very much. 4.66% yield.

BUY
BUY
October 28, 2013

Preferreds. Not a lot of growth potential. Stable ETF for the next year or so and he would be okay owning some here.

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Preferreds. Not a lot of growth potential. Stable ETF for the next year or so and he would be okay owning some here.

COMMENT
COMMENT
August 30, 2013

This is interesting, because what they have done is to delete a lot of the perpetuals in this ETF. Likes it simply as a tax treatment. However, it is vulnerable. Likes the structure of it.

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This is interesting, because what they have done is to delete a lot of the perpetuals in this ETF. Likes it simply as a tax treatment. However, it is vulnerable. Likes the structure of it.

BUY
BUY
August 26, 2013

Has a lot of rate-reset laddered 5 years, which he prefers. There is an active ETF that is a little bit better. He still expects US 10 year to go up a bit more so there is still some more paid here. It is probably due for a rebound soon. 4.5% yield.

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Has a lot of rate-reset laddered 5 years, which he prefers. There is an active ETF that is a little bit better. He still expects US 10 year to go up a bit more so there is still some more paid here. It is probably due for a rebound soon. 4.5% yield.

COMMENT
COMMENT
August 13, 2013

Not sure of the exact composition of this one but, in general, preferred securities rank as somewhat of a hybrid security. In an environment of people looking for income, they are a very attractive part of the capital structure of the company. You don’t have all the exposure and volatility of a common equity but you are getting a higher rate of return and if you could buy the bonds of the issuing company. The plus is that you get a slightly higher running yield and on a laddered format you are always replacing preferreds as they come due. The downside is that you don’t actually have any upside exposure. Preferreds have the unique characteristic that all the odds are in favour of the issuer.

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Not sure of the exact composition of this one but, in general, preferred securities rank as somewhat of a hybrid security. In an environment of people looking for income, they are a very attractive part of the capital structure of the company. You don’t have all the exposure and volatility of a common equity but you are getting a higher rate of return and if you could buy the bonds of the issuing company. The plus is that you get a slightly higher running yield and on a laddered format you are always replacing preferreds as they come due. The downside is that you don’t actually have any upside exposure. Preferreds have the unique characteristic that all the odds are in favour of the issuer.

COMMENT
COMMENT
July 17, 2013

The fact that they are all rate resets probably means that the ladder will stay intact. If there are many bank resets in this one, a lot of them will be called in the next couple of years. It’s a better way of playing the Preferred market because your risks are spread out as to the potential maturity of the resets and the quality is pretty good. He is not wild about Preferreds but doesn’t see a whole lot of downside risks.

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The fact that they are all rate resets probably means that the ladder will stay intact. If there are many bank resets in this one, a lot of them will be called in the next couple of years. It’s a better way of playing the Preferred market because your risks are spread out as to the potential maturity of the resets and the quality is pretty good. He is not wild about Preferreds but doesn’t see a whole lot of downside risks.

COMMENT
COMMENT
December 31, 2012

Never been a big fan of preferred shares because they are sold subject to interest rate changes. However, in this case they have gotten rid of the perpetual rate preferreds so there won’t be the same vulnerability to an increase in rates. About 70% of this is in P1s andP2s which is good. Likes the product.

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Never been a big fan of preferred shares because they are sold subject to interest rate changes. However, in this case they have gotten rid of the perpetual rate preferreds so there won’t be the same vulnerability to an increase in rates. About 70% of this is in P1s andP2s which is good. Likes the product.

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