The investment case for subordinated securities: Five managers’ views

Bill Scapell, senior portfolio manager, tells Fund Strategy that investment grade preferred securities typically offer some of the highest income rates in high grade fixed income markets, with yields that have recently been competitive with high-yield bonds. Scapell also suggests that preferred securities have also had diversifying correlation with equities and other non-traditional asset classes as banks and insurance companies, the largest issuers of preferred securities, are typically not well represented in other fixed income strategies, such as high yield bonds.