April 17, 2015
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Well kids our topic today is: PowerShares Variable Rate Preferred Portfolio ETF. VRP
When you look at the chart of VRP. you almost have to laugh. It’s flat as a pancake.
BUT that’s not necessarily a bad thing. We do not really want drama in our portfolio. We do want conservative investments that give us good yield.
So why are we looking at this position. Essentially this is a play on rising rates………..with many of the big thinkers in the financial industry projecting a rise may be delayed until 2016. BUY at $25.25.
While we wait, VRP is throwing us a decent yield. Here is some copy from www. seekingalpha.com my favorite resource for financial information.
PowerShares Variable Rate Preferred Portfolio ETF (NYSEARCA:VRP) is the only variable or floating rate preferred ETF available at this time. While there are other ETFs that track or are based upon floating rates, such as iShares Floating Rate Bond ETF (NYSEARCA:FLOT) and Market Vectors Investment Grade Floating Rate Bond ETF (NYSEARCA:FLTR) this ETF focuses only on preferred or preferred equivalents. This rather young non-diversified ETF first started trading on 05/01/2014 so its performance is limited to only five months. We decided to examine its underlying index, components, sectors, country exposure, and credit ratings and determine its risks if, and when, rates move higher and provide our recommendation.
The ideal situation for this ETF is a slowly improving economy with rates moving up slowly. One could easily say that is the ideal conditions for the stock market and equities as well. As such, we would only recommend this investment for those again, seeking high income in a high yielder, higher risk investment balanced with 50% high yield and 50% investment grade.
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From Gallup one of the leading research orgs. in the US:
PRINCETON, NJ — Americans start the new year with a variety of national concerns on their minds. Although none is dominant, the government, at 21%, leads the list of what Americans consider the most important problem facing the country. The economy closely follows at 18%, and then unemployment/jobs and healthcare, each at 16%. No other issue is mentioned by as much as 10% of the public; however, the federal budget deficit or debt comes close, at 8%.
SEARS an American institution is almost dead:
Though he has never admitted it publicly (it would be bad for business), it was pretty obvious that Lampert had no grand ambition for reviving the Sears retail empire. That would be ludicrous, and Lampert is too smart for that.