Preferred stock fund: I hold a good-size position in two Flaherty & Crumrine preferred stock funds, PFD and PFO.
The Flaherty and Crumine operation does more in-house work than I had known -- they run their own credit ratings which I knew, and also though, their own trading desk (which apparently is unusual):
finance.yahoo.com
"Mr. Crumrine: In terms of our philosophy, we begin on a bottom-up basis and do all our credit work internally. We have a credit group in our office in New Jersey. As a relatively small shop, which we certainly are, we are able to do this because the preferred market is so concentrated by industry. It is somewhere in excess of 95% banks, insurance companies and utilities. These three industry groups constitute the vast majority of the preferred market, and we have very experienced analysts focusing in each, in addition to the other small percentage of the preferred market that is not in those three industry groups. So it's bottom-up, credit driven.
In addition, we manage our portfolios right on the trading desk, which I think is a little unusual. In a typical investment advisory firm, some portfolio manager will make a decision regarding investments in a portfolio and those transactions will be executed by somebody else. We don't run money that way; we actually run the portfolios right on the trading desk. Two of our four partners are traders. They make the portfolio decisions based upon input they are getting from our research group. Hence, I think it's a little unusual in terms of how the firm is structured."
I view a preferred-stock fund having their own traders as a positive. |
