Unlocking Value in Preferred Stocks: The Case for Active Management

Exploring the intricate world of preferred stocks reveals a distinct landscape where active management strategies can significantly outperform passive approaches, challenging conventional wisdom from the equity markets.\n

Beyond Passive Benchmarks: Crafting Alpha in Preferred Securities

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The Equity Indexing Paradigm: A Foundation to Re-evaluate

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The established advantages of passive investment vehicles within the equity domain are widely recognized. Statistical evidence, such as the latest S&P Dow Jones Indices data, consistently demonstrates that a substantial majority of large-capitalization actively managed funds in the United States have historically lagged behind the performance of the S&P 500 Index over various periods, notably over the five years concluding in December 2024.

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Active Strategies in Niche Markets: A Virtus InfraCap Success Story

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The Virtus InfraCap U.S. Preferred Stock ETF exemplifies how a meticulously executed, research-centric investment methodology can generate considerable value in segments of the market often overlooked or misunderstood. This bespoke approach highlights the benefits of discerning security selection and dynamic portfolio adjustments tailored to specific asset characteristics.

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Preferred Stocks: A Hybrid Asset Demanding Bespoke Indexing

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While the notion of passively tracking preferred stock indices might initially appear efficient, a closer examination reveals that the conventional construction methodologies underpinning most benchmarks are not ideally suited for this unique hybrid asset class. Preferred stocks possess distinct features that blend elements of both equities and fixed income, requiring a more specialized indexing framework or, more effectively, active oversight to capture their full return potential and mitigate inherent risks.