Preferred Securities Quarterly Guide: A quarterly guide for individual investors

Research evidence excerpt

Preferred Securities Quarterly Guide: A quarterly guide for individual investors

Accessible version

Preferred Securities Quarterly Guide

A quarterly guide for individual investors

This publication lists the preferred securities contained in our extensive database. It is not a recommended list. 06 July 2026

For recommendations, see the latest edition of our Preferred Recommended List.

Equity Derivatives

Preferreds gained in Q2 as ceasefire optimism overcame inflation risks United States Preferred Strategy

In Q2, broad-market $25 par preferreds, as measured by the ICE BofA Core Plus Fixed Rate Preferred Index

(P0P4), returned +1.3% on a total return basis, bringing the year-to-date return to -0.3% as of June month-end Michael Youngworth, CFA

(Exhibit 2). After rallying sharply in April (+3.0%) amid the reports of a ceasefire in the Middle East, duration CBs,BofASPfds & Derivs Strategist

assets once again trended lower in both May and June as sticky inflation has pressured yields and has caused +1 646 855 6493

michael.youngworth@bofa.com

markets to reprice benchmark rate expectations. Indeed, a function of both worsening inflation data and

hawkish comments from new Fed Chair Kevin Warsh, our BofA economists now think the Fed will hike 75bps in

2026, whereas earlier this year they had 0expected rate cuts (see their 22-Jun Federal Reserve Watch note).

Exhibit 1: Preferred market fund flows and size ($bn)

Fixed-to-floating rate $1000 par preferreds have outperformed The full preferred market size (including perps and dated

hybrids) has risen back to new highsWhile longer-duration fixed-rate structures have been volatile, less rates-sensitive fixed-to-floating rate $1000

pars have outperformed, adding +2.6% in Q2 and +2.4% year-to-date.