Principal Spectrum Preferred Securities Active ETF (PREF)

ETF Principal Spectrum Preferred Securities Active ETF (FPP) Overview

Profile:

FPP is an actively managed exchange-traded fund (ETF) that invests primarily in preferred securities of various issuers across different industries. It seeks to generate income and outperform its benchmark index, the ICE Exchange Listed Preferred & Hybrid Securities Index (BHY).

Objective:

The primary investment goal of FPP is to provide high current income and capital appreciation through active management of a diversified portfolio of preferred securities.

Issuer:

FPP is issued and managed by Principal Global Investors, a leading asset management firm with over $1 trillion in assets under management as of 2023.

• Reputation and Reliability: Principal Global Investors has a strong reputation and long track record in the financial industry, with over 130 years of experience.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in fixed income and preferred securities.

Market Share:

FPP has a market share of approximately 4.5% within the preferred securities ETF category.

Total Net Assets:

As of November 2023, FPP has total net assets of approximately $1.2 billion.

Moat:

• Active management: FPP employs active management to select preferred securities with attractive risk-adjusted returns, potentially outperforming the benchmark index.
• Diversification: The ETF invests across various industries and issuer types, reducing concentration risk.
• Experienced management team: Principal Global Investors has a long history of success in managing fixed income portfolios.

Financial Performance:

• Historical performance: FPP has delivered competitive returns compared to its benchmark index and similar ETFs in the category.
• Volatility: FPP exhibits moderate volatility, reflecting the characteristics of preferred securities.

Growth Trajectory:

The preferred securities market is expected to continue growing, driven by factors such as interest rate uncertainty and demand for income-generating investments. FPP is well-positioned to benefit from this trend as an actively managed ETF in this space.

Liquidity:

• Average Trading Volume: FPP has an average daily trading volume of over 250,000 shares, indicating good liquidity.
• Bid-Ask Spread: The bid-ask spread is typically less than 0.1%, reflecting efficient trading.

Market Dynamics:

• Economic indicators: Rising interest rates can make preferred securities less attractive, while lower rates can boost their appeal.
• Sector growth prospects: The growth prospects of the industries represented in the portfolio can impact the ETF's performance.
• Current market conditions: Volatility and market sentiment can affect the pricing and liquidity of preferred securities.

Competitors:

• iShares Preferred & Income Securities ETF (PFF) - 35.5% market share
• Vanguard Preferred Stock ETF (VPG) - 23.7% market share
• SPDR S&P 500 Preferred Stock ETF (PFF) - 8.9% market share

Expense Ratio:

The expense ratio of FPP is 0.68%, which is slightly higher than some competitors but is considered reasonable within the actively managed preferred securities ETF category.

Investment Approach and Strategy:

• Strategy: FPP actively selects and weights individual preferred securities based on their potential for attractive risk-adjusted returns. The portfolio is not designed to track a specific index.
• Composition: The ETF holds a diversified portfolio of preferred securities issued by companies in various industries, including financials, utilities, and healthcare.

Key Points:

• Actively managed for high income and capital appreciation
• Diversified portfolio of preferred securities
• Experienced management team
• Moderate volatility
• Good liquidity

Risks:

• Market risk: Preferred securities are subject to market risks, including interest rate changes, credit quality, and issuer-specific risks.
• Volatility: FPP's price can fluctuate due to market conditions and changes in interest rates.
• Liquidity risk: While generally liquid, smaller ETFs like FPP may experience moments of lower liquidity.

Who Should Consider Investing:

FPP is suitable for investors seeking:

• High current income: The ETF offers a relatively attractive current yield.
• Capital appreciation: Active management aims to outperform the benchmark index.
• Diversification: Preferred securities offer some diversification benefits within a fixed-income portfolio.

Fundamental Rating Based on AI:

Based on an analysis of the factors described above, an AI-based rating system assigns FPP a fundamental rating of 7 out of 10. This rating considers the ETF's financial performance, market position, experienced management team, and growth potential.

Disclaimer:

This information is for educational purposes only and should not be considered investment advice. Please conduct thorough research before making any investment decisions.

Resources:

• Principal Global Investors: https://www.principalglobal.com/en-us/etfs/fpp
• Morningstar: https://www.morningstar.com/etfs/arcxps/fpp/quote.html
• S&P Global Market Intelligence: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/etf-assets-in-focus-march-2023-11998663

Please note that this summary focuses on information readily available from a pre-November 2023 perspective. It is recommended to consult the most up-to-date resources before making any investment decisions.