Important Notes:
Issued by corporates, preferred securities rank between traditional bonds and common stocks in the capital structure of a corporate. In the event of corporate financial distress or a bankruptcy, a company's preferred securities are senior to common stock but subordinated to traditional bond.
The preferred securities issuers are usually large and highly regulated institutions and/or companies with stable cash flows such as banks, utilities, and real-estate investment trusts (REITs).
The average credit rating of preferred securities is BBB-, an investment grade (IG) rating.
Banks, insurance companies and financial services
Bank of America Corporation, HSBC Holdings, Morgan Stanley, MetLife Inc.
Utilities
Dominion Energy Inc., DTE Energy Company, NextEra Energy Capital Holdings Inc.
Others
Vodafone Group Inc., Ford Motor Company, Brunswick Corporation
Preferred securities offer an attractive combination of relatively high yield and high quality. With an average investment-grade rating, preferred securities yield around at 4.3% on average, higher than other high quality bonds.
Fig.1 Yield and credit rating of fixed income assets3
Most preferred securities are issued by well-known corporates such as large banks and insurers, with high credit quality. Historically, the default rate of preferred securities was much lower than global high yield bonds.
Fig.2 Average long term default rates (1990 – 2020)4
Manulife Preferred Securities Income Fund aims to make monthly distributions with potential capital growth.
(The distribution yield is not guaranteed. Distribution may be paid out of capital. Refer to Important Note 2.)
Solid portfolio management team with extensive experience with preferred securities and the utility industry.
For illustrative purposes only and does not represent the actual investment.
29+ years
Investment experience by
the US based lead manager
150+
Global fixed income
investment experts6
USD 5.5 billion
AUM in preferred securities7,
one of the key players in
the market