PREF Profile
The Principal Spectrum Preferred Securities Active ETF is an actively managed fund focused on investing primarily in preferred securities. Under normal market conditions, the fund allocates at least 80% of its net assets, including any borrowed funds used for investment purposes, to preferred securities at the time of acquisition. These preferred securities include preferred stock, certain depositary receipts, and various forms of junior subordinated debt, which typically allows issuers to defer interest payments without triggering immediate default.
The fund’s strategy is centered on selecting high-quality preferred securities with strong potential for stable income generation. Preferred securities, often offering higher yields compared to common equity, provide investors with priority over common stockholders in dividend payments and, in the case of liquidation, asset claims. This focus aims to deliver consistent income while managing risks associated with these securities.
In addition to its focus on preferred securities, the fund places a significant emphasis on diversification within the financial services sector. It concentrates its investments, committing more than 25% of its net assets, in this sector. This concentration allows the fund to leverage opportunities within financial services, including banks, insurance companies, and other financial institutions, which are significant issuers of preferred securities.
Overall, the Principal Spectrum Preferred Securities Active ETF is designed for investors seeking income through a portfolio predominantly composed of preferred securities. Its active management approach aims to optimize yield while concentrating investments in the financial services sector, providing targeted exposure to this key industry. This strategy seeks to balance income generation with sector-specific investment opportunities, making it an appealing option for those interested in the income potential of preferred securities.
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