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Rudy Luukko
The recent torrid performance of preferred shares is too good to last, but fund managers say there’s still more upside for these securities that combine elements of fixed income and equities. The key reasons: favourable interest rate trends, shrinking supply and attractive yields.
Preferred shares and funds that invest in them have produced returns more like hot growth stocks over the past year, making yields on high-quality government or corporate bonds look even skimpier by comparison.
In the 12 months ended June 30, the S&P/TSX Preferred Share index soared 36.6%, and some actively managed ETFs did even better. Over the same period, the FTSE Canada Universe Bond index was down 2.4%.