Standard & Poor’s launched the S&P/TSX North American Preferred Stock Index today, which will cover the preferred share market across Canada and the U.S. The Index aims to provide investors with broad diversification and exposure to North American preferred stocks, according to a press release from the company.
“Preferred stocks are attractive to investors in today’s low interest rate environment, due to their higher yields,” said Steve Rive, managing director at S&P Indices. “The S&P/TSX North American Preferred Stock Index will provide investors with a diversified and broadly representative exposure to this important segment of the market.”
Preferred shares combine the characteristics of debt and common stocks, stated the release. Their returns have low correlations with common stock returns and with bond returns, making them good diversifiers. While their expected volatility and returns lie between those of common stocks and bonds, their yields are typically higher than that of common stock, the bond market and the money market.
Watch for an ETF to be launched based on this index.
