Preferred shares and outlook for months ahead

Infrastructure Capital Advisors

PFFI holds a diversified basket of preferred income securities (preferreds) that generally trade below par value (accruing dividends) and are subject to corporate actions. In a falling interest rate environment, preferred stocks can offer investors high yield exposure and the value of preferreds tend to increase when rates are falling. Under this environment, we believe investors can access high yields with total return opportunities, through investment and non-investment grade preferred stocks.

In addition, active managers can harvest gains and reallocate to preferred stocks that may offer higher fixed rate exposure, stronger credit profiles, and near-term total return opportunities (for example securities that are likely to be redeemed in the near future).

Typically, par value is the price at which the securities are callable by the issuer. In a normal market, most preferreds will trade near or above par value, where potential upside is limited by the call feature. In dislocated or volatile markets, preferreds trade well below par, creating potential capital appreciation opportunities if stock and bond markets stabilise.

Now that inflation has fallen and global banks have signalled a rate cut cycle in 2026, we believe that it is a beneficial time to add preferred stocks to balanced investment portfolios.

« Currently, active managers can select preferred stocks that offer investors high current yields and total return opportunities. «

One of the benefits actively managed preferred stock funds have over passively managed funds is the ability to timely purchase preferred stocks that temporarily trade at large discounts due to market dislocations or drawdowns.

Currently, active managers can select preferred stocks that offer investors high current yields and total return opportunities. As of October 31, 2025, $25 par listed preferred stock trades at an average price of approximately $21.78 (off approximately 12.9% versus par) and trade at an average yield of 6.5%.

Geopolitical tensions, tariff risks, mega technology market concentrations, and recession risks can place downward pressure on the market. During these periods of dislocation, we see opportunities to buy preferreds at 10%+ yields, well above average discounts. We believe this trend may continue, temporarily providing active mangers an opportunity to buy preferreds that are on their watch list at substantial discounts. Passively managed funds generally rebalance on a monthly or quarterly basis and are required to closely track the holdings of the underlying index. Thus, passively managed preferred stock funds can miss opportunities to purchase preferred stocks at substantial discounts or harvest gains in preferreds that are trading at or above par value.

Infrastructure Capital Preferred Income UCITS ETF (PFFI) seeks to maximise income and pursue strategic opportunities for capital appreciation over the medium to long term. The ETF will primarily invest in a portfolio of preferred, hybrid, and income generating securities actively selected by the management team.

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Preferred shares and outlook for months ahead

﻿ « Currently, active managers can select preferred stocks that offer investors high current yields and total return opportunities. «

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« Currently, active managers can select preferred stocks that offer investors high current yields and total return opportunities. «