Q: Are preferred shares ETFs a good buy? They keep sinking lower. Buy the dip on ZPR.TO?
5i Research Answer:
Preferreds have been strange traders over the past few years. The current weakness might be a relative attractiveness issue, with savings accounts paying in the 4% range. Investors likely need a higher yield and in turn lower pref prices to justify owning the asset class. While we would not be particularly concerned with preferreds in general, they might be in a bit of a tough spot in the short to medium term. But if interest rates peak they should at least stabilize. We would be ok slowing buying ZPR for income.