Bramshill Market Commentary

US Preferred Securities: Unique Characteristics from a Bramshill Perspective 

With interest rates around the world at or approaching all time lows, income investors have an obvious motivation to look beyond their customary areas of market concentration.  From its perspective as an unconstrained income investor, Bramshill believes that the U.S. market in preferred securities is quite compelling compared to most alternatives.

Over the past ten years, the annualized total return for the US preferred sector measured by the Bank of America Preferred Index was 8.20%. This is very comparable to the 8.36% annualized total return for U.S. high yield.  During this period, preferred securities have been less volatile than equities.   More significantly, the correlation of preferreds to equities is far less than high yield. This indicates that the diversification benefit of preferreds is much greater than high yield with a comparable return and less volatility.

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