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
Standard Chartered plc, HSBC Holdings, JPMorgan Chase, MetLife Inc.
CMS Energy Corp., Dominion Energy Inc., NextEra Energy Inc., Southern Company
Air Lease Corp., Vodafone, QVC Inc., Qwest Corp
Preferred securities offer an attractive combination of relatively high yield and high quality. With an average investment-grade rating, preferred securities yield around at 4.1% 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 amount 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.
Investment experience by
the US based lead manager
Global fixed income
USD 5.3 billion
AUM in preferred securities7,
one of the key players in
Unless otherwise stated, all information sources are from Manulife Investment Management, as of 31 March 2021. A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange trading suspensions and closures, and affect fund performance. For example, the novel coronavirus disease (COVID-19) has resulted in significant disruptions to global business activity. The impact of a health crisis and other epidemics and pandemics that may arise in the future, could affect the global economy in ways that cannot necessarily be foreseen at the present time. A health crisis may exacerbate other pre-existing political, social and economic risks. Any such impact could adversely affect the fund's performance, resulting in losses to your investment. The information in this material may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations, and is only as current as of the date indicated. There is no assurance that such events will occur, and may be significantly different than that shown here . Past performance is not indicative of future performance. Information about the asset allocation is historical and is not an indication of the future composition.
Issued by Manulife Investment Management (Hong Kong) Limited.
This material has not been reviewed by the Securities and Futures Commission (SFC).