Preferred Shares Enjoy Another Good Month in July, Prompted by Rising Bond Yields and Interest Rates

The preferred share market enjoyed another good month in July. Rising bond yields and interest rates prompted higher prices for rate reset and floating rate issues, but lower prices for perpetual issues. Fixed rate reset issues gained 2.2% in the month, while perpetual issues declined 1.8%. On balance, the S&P/TSX Preferred Share index returned 1.11%…

Strong Performance by Rate Reset Issues Propelled Preferred Shares to a Robust Return in June

Strong performance by rate reset issues propelled the S&P/TSX Preferred Share index to a robust 2.84% return in June. Rising bond yields led to increased buying interest in rate reset shares, but growth in preferred share Exchange Traded Funds (ETFs) were also a factor. Approximately $260 million of new deposits flowed into the largest ETFs,…

Following Strong Gains Earlier in the Year, Investors Pull Back from Preferred Share Market in May

In last month’s commentary, we noted the potential for the preferred share market to consolidate during May, and that is what transpired, as the S&P/TSX Preferred Share index returned -1.67%. Following strong gains earlier in the year, investors appeared to pull back from the market leading to declines in prices of most issues. The weakness…

Preferred Shares Rally into Early April, But Finish the Month Slightly Lower

The Canadian preferred share market initially extended its rally into early April, but prices declined over the balance of the month to finish slightly lower than where they began. In part, the pullback later in the month could have been market fatigue as preferred share prices have risen almost continuously since mid-November. As well, some…

Canadian Preferred Shares Continue Their Upward Pattern in March

Canadian preferred share prices continued to move upward in a seesaw pattern during March. An absence of new issues and occasional ETF flows were contributing factors behind the market strength. Interestingly, increased purchases of preferred share ETFs had a delayed reaction to underlying preferred share prices. As well, when ETF volumes declined, it led to…

Canadian Preferred Shares Continued to Move Upward in Price in February

Following their very strong gains in January, Canadian preferred shares continued to move upward in price in February, but at a more subdued pace. Reduced activity in preferred share Exchange Traded Funds (ETFs) probably accounted for the smaller preferred share gains. The Bank of Montreal Laddered Rate Reset ETF (ZPR) experienced a 45% drop in…

Preferred Shares Immune to the Volatility Arising From the Changeover in U.S. Administration

The Canadian preferred share market started 2017 with a bang, outperforming investment grade bonds, common stocks and even junk bonds by a significant margin. Unlike other securities, preferred shares were immune to the volatility arising from the changeover in the U.S. administration. In part, the strong performance of preferred shares reflected investors’ ongoing search for…

Canadian Preferred Share Market Moves Sharply Higher In December

The Canadian preferred share market moved sharply higher in December as large scale buying of preferred share Exchange Traded Funds (ETFs) pushed the prices of individual issues upward. A lack of new issues contributed to the market’s strength. As well, in contrast with recent years, there was relatively little tax-loss selling in December. Rate reset…

Canadian Preferred Share Market Unaffected By U.S. Presidential Election

In contrast with most global financial markets during November, the Canadian preferred share market was mostly oblivious to the surprise victory of Donald Trump in the U.S. presidential election. While equity markets reacted favourably to the more optimistic outlook, bond markets were dismayed by the potential for substantially higher U.S. budget deficits and increased inflation,…

Preferred Share Market Enjoys Robust Returns In October

The preferred share market enjoyed robust returns in October, powered by growing institutional participation and buying of preferred share Exchange Traded Funds (ETF). Rate reset issues had particularly strong returns, but still trail perpetual issues by a wide margin on a year-to-date basis. The S&P/TSX Preferred Share Index returned 2.32% in the month. There was…

Subdued Volatility for Preferred Shares in September

September featured less volatility for many financial markets than in recent months, not just for preferred shares, but also for bonds and equities. The S&P/TSX Preferred Share Index returned -0.10%, the FTSE TMX Canada Bond Universe Index earned 0.25% and the S&P/TSX Composite Index gained 1.22%. Even U.S. stocks, as measured by the S&P 500…

Demand for Preferred Shares Continues in August

The S&P/TSX Preferred Share Index earned 1.12% in August. Ongoing demand for the relatively high yield of preferred shares, combined with a shortage of new issues, pushed share prices higher and yields lower early in the month. The new issues that did come to market enjoyed robust investor interest, but pushed the prices of existing…

Preferred Shares Climb Back Into Positive Territory In July

The risk-off sentiment following the British Brexit vote in late June continued into the first week of July, with bond prices moving higher and equity and preferred share prices under some downward pressure. Concerns about the British referendum subsequently faded though, with growing expectations that Britain would delay triggering its departure decision until next year…

Preferred Shares Unaffected By Brexit In June

Preferred shares once again demonstrated their diversification value in June. Global headlines and financial markets were dominated in the month by the British referendum to stay or leave the European Union. In the aftermath of the surprise result to leave the E.U., equity markets such as the S&P/TSX Composite Index in Canada and the S&P…

Preferred Shares Go for a Ride in May

Canadian preferred share prices declined in the first half of May before rallying back in the second half of the month to finish marginally higher than a month earlier. In part, the weakness early in the month may have been caused by investors lightening up their preferred share holdings in anticipation of attractive new issues…