Important Notes:
Issued by corporates, preferred securities rank between senior bonds and common stocks in the capital structure1 of a corporate. They can be broadly classified into two types - preferred bonds and preferred stocks:
In the event of corporate financial distress or a bankruptcy, a company's preferred securities are ranked lower than traditional bonds but higher than common stock.
Preferred security issuers are mainly large and highly-regulated institutions including banks, insurance companies, utilities and REITs.
1. Capital structure means that a corporate raises fund through issuing securities such as stocks, bonds and hybird securities.
2. Preferred securities issuers pay a dividend or interest to the holders, in two categories; cumulative and non-cumulative. For cumulative preferred securities, if the issuer does not pay a dividend on time, the dividend payable will accumulate and later, the holders are entitled to these cumulative dividends prior to common stock holders. For non-cumulative preferred securities, if the issuer cannot afford to pay the dividend in full, the holders of preferred securities have no right to claim the remaining part of the dividend in the following years. For illustrative purposes only.
With an average investment-grade rating, preferred securities offer yields that are comparable to high yield bonds, meaning investors could enjoy relatively high yields with lower credit risks.
Source: Bloomberg, as of February 28, 2025. Institutional par preferred securities are represented by ICE BofA US Capital Securities Index (C0CS). Retail par preferred securities are represented by ICE BofA Core Plus Fixed Rate Preferred Securities Index (P0P4). The above yield to maturity does not represent the distribution yield of the Fund and is not an accurate reflection the actual return that an investor will receive in all cases. A positive distribution yield does not imply a positive return. For illustrative purposes only. Past performance is not indicative of future performance.
Preferreds only saw two negative calendar year return in the past decade, with strong rebound on the following year. In 2019, preferred securities registered a 18.4% return as the Fed started cutting interest rates.
Source: Morningstar, Manulife Investment Management, as of December 31, 2024. Preferred Securities represented by ICE BofA US All Capital Securities Index. For illustrative purposes only. Past performance is not indicative of future performance.
Preferred securities are well positioned to help buffer economic slowdown as near 90% of preferred issuers are rated as investment grade and are generally well-established, high-quality companies with solid balance sheets. Historically, the default rate of preferred securities was much lower than global high yield bonds.
Source: Global high yield bonds are represented by ICE BofA Global High Yield Index; Preferred securities are represented by ICE BofA US All Capital Securities Index. Default rates for Global high yield bonds sourced from BofA Securities, as of December 31, 2024. Default rates for preferred securities were calculated by Manulife Investment Management based on ICE BofA US All Capital Securities Index, as of December 31, 2024. Calculated annually. Past performance is not indicative of future performance.
Manulife Preferred Securities Income Fund aims to offer monthly distributions with potential capital growth. Compared to broad preferred market, the Fund is more diversified, with focus on utilities, energy and financials sectors, which are better-positioned in a high inflation and low growth environment.
The Fund adopts dynamic strategies to respond to the changing macroeconomic environment by flexibly allocating into various types of preferred securities, e.g., institutional/retail, fixed-to-floating/fixed and convertible/nonconvertible. The Fund also actively manages portfolio duration in accordance with the interest rate cycle.
For illustrative purposes only and does not represent the actual investment.
Receive potential regular income*
Potential quarterly payout.
* The intention of the Manager to declare income distribution at least quarterly (if any) is not guaranteed, and the Manager may review the distribution policy depending on prevailing market conditions.
30+ years
investment experience by US-based lead manager3
150+
global fixed income investment experts4
USD 5.02 billion
AUM in preferred securities5, one of the key players in the market
3. Source: Manulife Investment Management, as of March 31, 2025.
4. Source: Manulife Investment Management, as of June 30, 2025. Manulife Investment Management’s global investment professional team includes expertise from several Manulife IM affiliates and joint ventures; not all entities represent all asset classes.
5. Source: Manulife Investment Management, data as of December 31, 2024.
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