Unique investment offering dividend and return potential
1 Capital structure means that a corporate raises fund through issuing securities such as stocks, bonds and hybrid 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.
Source: Bloomberg. As of 31 December 2021.
Preferred markets are represented by the ICE BofAML US All Capital Securities Index (I0CS). US High Yield are represented by ICE BofAML US High Yield Index (HOAO). BBB Global Corp is represented by ICE BofAML BBB Global Corporate Index; US Treasuries are represented by ICE BofAML US Treasury & Agency Index (G0A0). For illustrative purposes only. Past performance is not an indication of future results. The above yield to maturity does not represent the distribution yield of the Fund and is not an accurate reflection of the actual return that an investor will receive in all cases. A positive distribution yield does not imply a positive return.
Most preferred securities are issued by well-known corporates such as large banks and insurers, with high credit quality. Historically, the default rate of preferred securities was much lower than global high yield bonds.
Source: Default rates for global high yield bonds and global investment grade bonds are sourced from Moody’s Investor Services, as of 31 December 2020.
Default rates for preferred securities for the periods of 1990-2017 were sourced from Wells Fargo. Starting from 2018 default rates for preferred securities were calculated by Manulife Investment Management based on ICE BofAML US All Capital Securities Index. As of 31 December 2020. Past performance is not indicative of future performance.