More From Jane Leung, CFA
Company & Industry Overviews
Preferred stocks are less volatile compared to common equities. This is mainly because a larger portion of the returns comes from dividends, which tend to be stable.
Financials tend to do well when interest rates rise. Rates usually rise when the economy is improving.
Treasuries (TLO) add ballast to a stock-centric portfolio while providing low yields.
Unlike common equities (RSP)(IWB), a rising interest rate scenario doesn’t necessarily affect preferred stocks negatively.