Summary
FPEI Chart
FPEI: A Good Mix Of Preferred Stock And Debt
First Trust Institutional Preferred Securities and Income ETF offers strong income generation with a 30-Day SEC Yield of 5.15%, focusing on institutional preferred securities. FPEI's diversified holdings include top international banks and an energy company, providing a steady income stream and reduced issuer-specific risks. The fund's active management and focus on institutional preferreds set it apart, offering potential outperformance despite a higher expense ratio of 0.85%.
Opportunities In The Preferreds Sector
We take a look at the preferreds sector across individual preferreds and funds. Preferreds offer high tax-adjusted yields for high-rate taxpayers and can act as "drier-powder" options. Individual preferreds offer advantages over passive ETFs in the $25-par market.
First Trust Institutional Preferred Securities and Income ETF Investors
| Name | Quantity | Cost | Value | Profit ($) | Gain (%) |
|---|---|---|---|---|---|
| BZ Brandon Zatopek Commonwealth Equity Services LLC | 378,955 | $7.31M | $7.28M | -$34,104.02 | -0.47% |
| PEP Philip E. Passafiume Protective Life Corp | 14,033 | $266,627 | $269,293.27 | $2,666.27 | 1% |
| JD Jim Dushek HARBOUR INVESTMENTS Inc. | 56,662 | $1.06M | $1.09M | $25,686.15 | 2.42% |
| RS Ramu Singh CALTON & ASSOCIATES Inc. | 15,540 | $300,773.95 | $298,368 | -$2,405.95 | -0.8% |
| PP Philip Perry FLAGSTAR ADVISORS Inc. | 29,400 | $550,000.66 | $560,952 | $10,951.34 | 1.99% |
First Trust Institutional Preferred Securities and Income ETF (FPEI) FAQ
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First Trust Institutional Preferred Securities and Income ETF Profile
| ARCA Exchange | US Country |
Overview
The fund is designed with a focus on investing a significant portion of its assets, specifically at least 80%, into institutional preferred securities along with income-producing debt securities. These investment vehicles are chosen with the intent to generate income. Preferred securities distinguish themselves by having a preferential position over common stock regarding the distribution of dividends and the liquidation of assets. However, they typically stand after all forms of a company's debt, including senior and subordinate debts. This strategic positioning within the financial hierarchy makes preferred securities a unique blend of equity and debt features, catering to investors seeking a balance between risk and reward.
Products and Services
- Institutional Preferred Securities
These are a primary investment vehicle for the fund, chosen for their unique position in the capital structure. Institutional preferred securities offer higher income potential compared to common stock due to their preference in dividend payments and asset liquidation, albeit they assume greater risk than senior forms of debt. The fund focuses on these securities to leverage their income-generating potential while managing the associated risks.
- Income-producing Debt Securities
Alongside preferred securities, the fund invests in various debt instruments designed to produce income. These can include bonds, debentures, notes, and other forms of debt that generate regular income. By including these in the investment mix, the fund aims to diversify its income sources and enhance the stability of returns for its investors, balancing the higher risk of preferred securities with the relative safety of debt instruments.
