Targeted Promotion, July 4 2018 | Page 2 | Tangerine Bank | Discussion forum

Bill,

I’m aware of the impact of rates on preferred shares. The attractive thing about this ETF is that the preferred shares are equally divided into a 1-5 year ladder much like a 5 year GIC ladder so in theory each year some lower rate preferreds are expiring and being replaced with higher rate ones in a rising rate environment. The 52 week price range has been between 11.31 and 11.97 so there’s a little price risk but overall I believe this is a very conservative investment and MoneySense rates this as one of their top fixed income ETFs. Just getting so tired of this interest rate promo game that I’m looking for alternatives without having to lock into GICs.

Love it that your buddy has one of those Johnny Cash cardboard cutouts.

JC

semi-retired said

Morningstar's rating for this ETF is only 1 star out of 5 for what it's worth.Everyone has a different opinion.Who do you believe ??

According to the graphs in MorningStar: BMO Laddered Preferred Share ETF (ZPR), performance has been poor. It has underperformed both its fund category and its category's index.

$10,000 invested in it when it started in 2012 has become only $10,047. Unit price started at $15 in November 2012. Now, it is trading around $11.69. Dividends barely kept up with the losses in value.

It is a misunderstanding that 20% of preferred shares somehow mature each year and the ETF gets the original investment back. These are not bonds. What actually happens is that the payout of 20% of the preferred shares reset each year according to their given formula.

Issuers can, but are not obligated to, redeem the shares on reset date. They won't if the shares reset to a higher yield that's still lower than what newly issued rate-reset preferreds yield.