Invesco PowerShares has launched the first ETF in Europe that tracks the performance of preferred shares.
Preferred shares are technically equities but behave more like bonds and have fixed dividends.
The PowerShares Preferred Shares Ucits ETF tracks the BofA Merrill Lynch Diversified Core Plus Preferred Net Total Return Index.
Nicolas Samaran, head of innovative product development at Invesco PowerShares, said: “Preferred shares provide yields comparable to high yield bonds, but from securities issued typically by more well-known companies.”
The ETF’s underlying index has produced a 6.1% annualised return over the past five years, similar to the US high yield market and “significantly higher” than US investment grade bonds,the firm said.
The London-listed ETF is available in US dollars with an ongoing charge of 0.5% per annum. Dividends will be distributed quarterly.
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