For investors seeking momentum, PowerShares Variable Rate Preferred Portfolio (LON:VRP) is probably on radar now. The fund just hit a 52-week high, and is up over 14.9% from its 52-week low price of $21.75 per share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
VRP in Focus
The fund holds variable- and floating-rate preferred stocks which reduce interest rate risk. The product charges 50 bps in fees (see Convertibles/CEFs/Preferred Stock ETFs here).
Why the Move?
With the U.S. benchmark Treasury yields falling below 1.50%, the drive for higher income has made this fund a winner. Juicy yields around 5% offered by preferred stocks attract investors to this space. Also, these securities have much lower volatility than stocks and provide stability to a portfolio in a rocky environment like what we are witnessing now.
More Gains Ahead?
It seems that this fund can be exercised a little further as evident by the positive weighted alpha of 2.67. A positive weighted alpha hints at more gains.
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PWRSH-VR PFD (VRP): ETF Research Reports
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Zacks Investment Research