BMO S&P/TSX Laddered Preferred

ZPR-T

Analysis and Opinions about ZPR-T

Signal
Opinion
Expert
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.

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.

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.

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.

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.

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