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One of the more humbling things an income investor can attempt is to manage a portfolio of preferred shares.

Preferreds are more complex than you think and not easy to research because so much less has been written about them in comparison with common shares. If you’re ready to hand the job of managing your pref shares to a pro, long-time preferred share analyst John Nagel has some thoughts for you.

Mr. Nagel, currently managing director of preferred shares at Leede Jones Gable Inc., recently put together a list of seven actively managed preferred share exchange-traded funds that he considers to be well managed. Here are the funds he included:

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  • Horizons Active Preferred Share ETF (HPR-T): Mr. Nagel praised the managers of this fund, Fiera Capital, which is one of the country’s largest managers of preferred shares. Globeinvestor.com pegs the dividend yield at 5.8 per cent, and the one-year total return to May 31 was minus 12.8 per cent.
  • Evolve Active Canadian Preferred Share Fund (DIVS-T): Managed by Addenda Capital since April 1. Mr. Nagel said they’ve been investing client assets in pref shares for decades. The yield was 6.3 per cent, while the one-year total return was minus 13 per cent.
  • Dynamic iShares Active Preferred Shares ETF (DXP-T): Mr. Nagel said this ETF can diversify into bonds. Yield of 5.3 per cent, one-year return of minus 12.7 per cent.
  • NBI Active Canadian Preferred Shares ETF (NPRF-T): Capital preservation is a focus of this fund. Yield of 4.5 per cent, one-year return of minus 10.6 per cent.
  • Lysander-Slater Preferred Share ActivETF (PR-T): Mr. Nagel said management focuses on capital preservation and has 20 years of experience in the preferred share market. Yield of 5.7 per cent, one-year return of minus 16.4 per cent.
  • RBC Canadian Preferred Share ETF (RPF-T): Focuses on rate reset preferreds, where the dividend is reset every five years to adjust to changing interest rates. Yield of 6.2 per cent, one-year return of minus 14 per cent.
  • Purpose Canadian Preferred Share Fund (RPS-NEO): Focus on capital preservation and tax-efficient income. Yield of 6.9 per cent, one-year return of minus 16.2 per cent.

A benchmark for these funds would be the S&P/TSX Preferred Share Index, which had a one-year total return to May 31 of minus 10 per cent. You can invest in this index through the iShares S&P/TSX Canadian Preferred Share Index ETF (CPD-T), which has a yield of 5.8 per cent.

-- Rob Carrick, personal finance columnist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

The Rundown

Short sales on the TSX: Bearish bets against TSX 60 ETF hit record high

Short sellers became less bearish on the general direction of Canadian stocks during the stock-market rally in April and May. But they came howling back in June as market valuations approached historical highs and the COVID-19 virus re-accelerated in parts of the United States. The shift in sentiment is highlighted by the jump in the short position in the iShares S&P/TSX 60 Index ETF (XIU-T). The number of XIU’s shares sold short climbed sharply in recent weeks to stand at 119.1 million as of June 22. This reading surpasses the peak established three months ago near the height of the COVID-19 scare. It also means that 32.9 per cent of XIU’s float is sold short, an historic high. Larry MacDonald has a detailed rundown of what the shorts have been up to on the TSX this month, including which stocks they are targeting the most. (for subscribers)

Bulls seem to smell danger as U.S. infection rates surge

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If the stock market’s robust rebound that began in March was largely owing to encouraging signs that developed economies were successfully slowing the pace of novel coronavirus infections, surging infection rates in many U.S. states are now causing an urgent reality check. David Berman discusses what happened in markets this week.

Others (for subscribers)

The week’s most oversold and overbought stocks on the TSX

Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Thursday’s Insider Report: Four executives make million dollar trades in these stocks

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Number Cruncher: Southeast Asian ETFs offer sustainable dividends amid U.S.-China tensions

Number Cruncher: In a whipsaw market, these 10 TSX stocks show their value relative to peers

Stocks’ 2020 rollercoaster ride rumbles on: World market themes for the week ahead

Globe Advisor

How ‘asset rich, cash poor’ investors can manage this crisis

Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation - a powerful tool to help you manage your clients’’ portfolios.

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What’s up in the days ahead

Ian McGugan this weekend will explain why the market is so baffled about how to position for the next phase of the coronavirus pandemic.

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

For more Globe Investor stories, follow us on Twitter @globeinvestor

You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.

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Compiled by Globe Investor Staff

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