For the Canadians following this forum who are interested in generating income, the Canadian preferred share market has been hammered of late, due to falling rates. It is a volatile market, but the investment grade yields available have become unusually attractive. Furthermore, the Canadian preferred share market has what I believe is a very unique category, namely fixed-reset preferred shares. It now represents some 80% of the market. The yield on these shares is set at a specified spread to the 5 year Canada and resets every 5 years. Owning those shares represents a bet on interest rates RISING, making them a highly unique fixed income product. Because interest rates have fallen recently, these shares have been hammered down.
If anyone is interested in hedging against the possibility of rates rising, and being paid for that hedge, more can be learned by following this blog: http://prefblog.com. The author of the blog, James Hymas, also offers an inexpensive subscription service for DYIs. James is arguably the foremost expert on Canadian preferred shares.
Thanks for that. I had a hard time finding the subscription service on his website so here is the link for anyone interested:
Information about the newsletter is here:
The subscription is $185 + tax/year (12 monthly newsletters) or $29 per edition.
I guess the decision to subscribe would depend on one’s level of investment in preferred stocks and how much better one might expect to do following the newsletter. I tend to admit my ignorance in these matters and follow other’s advice, and right now I have no idea about the quality of the preferred ETFs I’ve chosen, so I might give it a go or at least try an edition.
Thanks again. – Dennis
I bought a single edition of James Hymas’s newsletter. It is super technical and complicated – 41 pages of graphs and detailed profiles. I was hoping for some straight forward advice (like we get on Money for the Rest of Us) but its way over my head so not much use to me.
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