President Trump’s Tariff Talk: What Investors Need to Know
President Trump’s recent push for tariffs on various countries echoes his stance since 1989 when he first advocated for a tax on imports from Japan. Today, he applies the same rhetoric to Canada, China, Mexico, and Europe, imposing a 10% levy on Chinese imports and threatening more tariffs. So, how do these tariffs affect investors and the market?
## The Impact of Tariffs on Investments
### Short-Term Headwinds on Growth
– Tariffs act as a short-term obstacle to economic growth.
– Contrary to popular belief, they do not necessarily lead to inflation.
– Companies may absorb increased costs, but shareholders could feel the impact.
### Bond Investments as a Backdoor Bullish Play
– Amidst tariff uncertainties, bonds emerge as a strategic investment choice.
– The bond market’s response reflects the belief that tariffs are not inflationary.
– The 10-year yield remains below the 5% threshold, indicating a cautious approach.
## Preferred Stocks and Closed-End Funds (CEFs)
### Preferred Stocks: A Hybrid Investment
– Preferred stocks offer a mix of common stock and bond features.
– Their fixed dividends and sensitivity to interest rates make them an attractive investment.
– Preferred stocks often move in tandem with the bond market.
### Closed-End Funds (CEFs): An Ideal Investment Route
– Preferred CEFs provide diversification and discounts on preferred shares.
– Expert management in CEFs offers a hassle-free investment experience.
– Here are three preferred CEFs with attractive yields and discounts:
1. Cohen & Steers Limited Duration Preferred and Income Fund (LDP)
– Distribution Rate: 7.5%
– Discount to NAV: 4.9%
– Global preferred portfolio with limited duration focus.
– Utilizes debt leverage for higher dividends and trading discounts.
2. Flaherty & Crumrine Preferred Securities (FFC)
– Distribution Rate: 6.9%
– Discount to NAV: 6.8%
– Standard preferred CEF with a global financial sector focus.
– Aggressive management with higher leverage and varying credit quality.
3. Nuveen Variable Rate Preferred & Income Fund (NPFD)
– Distribution Rate: 10.5%
– Discount to NAV: 4.9%
– Emphasis on variable-rate income-producing securities for high yields.
## Analysis: What Investors Should Consider
President Trump’s tariff policies have stirred market uncertainties, affecting stock performance. However, bond investments and preferred CEFs offer a strategic alternative for investors seeking stability and yield in volatile times. By diversifying into these income-generating assets, investors can navigate the tariff turmoil and potentially benefit from long-term growth opportunities.
Investors should consider the impact of tariffs on their portfolios and explore alternative investments like preferred stocks and CEFs to weather market fluctuations and capitalize on income-generating opportunities in the current economic landscape.
The Nuveen Preferred and Income 2023 Fund: A Deep Dive into Performance and Potential
When it comes to investing, understanding the composition of a fund is crucial for making informed decisions. The Nuveen Preferred and Income 2023 Fund is no exception, with a unique blend of securities and strategies that set it apart from its peers.
Key Fund Characteristics:
- Roughly three-quarters of assets are invested in fixed-to-fixed rate securities
- 15% in fixed-to-floating rate securities
- 4% in pure variable-rate preferreds
- 65/35 U.S./international blend of primarily financial stocks
- High credit quality, with nearly 75% of assets being investment-grade
- 37% leverage to boost monthly distributions
Outperformance, Sure, But Still Not Much Performance
Despite its strong fundamentals, the Nuveen fund has faced challenges in the market. Its inception date in December 2021 coincided with a downturn in the preferred stocks market, impacting its initial performance. However, it is worth noting that the fund has managed to achieve a positive total return since its inception, setting it apart from its competitors.
Furthermore, Wall Street is taking notice of the fund’s potential, as the discount on its shares has narrowed from 85 cents on the dollar to just 5% in the past year.
Disclosure: Brett Owens and Michael Foster are contrarian income investors who seek undervalued opportunities in the U.S. markets. For more insights on their strategies, check out their latest report, “7 Great Dividend Growth Stocks for a Secure Retirement.”
Overall, while the Nuveen Preferred and Income 2023 Fund may not initially appear as strong as other funds, its unique characteristics and potential for growth make it a compelling option for investors seeking income and stability in their portfolios.
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In this rewritten article, we have broken down the key characteristics of the Nuveen Preferred and Income 2023 Fund, highlighting its investment strategies and performance. Despite facing challenges in the market, the fund has shown resilience and potential for growth, making it an attractive option for income investors. Understanding the nuances of this fund can help investors make informed decisions and navigate the complexities of the financial markets effectively.