Why Preferred is falling more than common?

CFA General
#1

Financial Preferred ETF (PGF) is falling much more than the financial common (KBE). Do you know why?

#2

You are confused man. KBE is the SPDR for bank sector. XLF is the SPDR for financial sector, which is much more volatile. PGF is Powershare, not SPDR, you cannot compare the two since they have different issuers. But right now it’s true that PFD are falling more then Equities. PFD rally on DVD projections and now investors are scared banks-broker/dealers will cut the PFD dividend, prices are low, yields are sky rocketing.

#3

after GSE nationalization market feels like preferred has same fate as equity in government intervention / bankruptcy scenarios (i.e. dividneds cut and holders get zero in liquidation) but with none of the upside potential of common. so basically the seniority of prefs vs common is viewed as practically worthless and you have none of the optionality. hence the underperformance. Many currently consider prefs to be the no-mans land of the capital structure.

#4

after GSE nationalization market feels like preferred has same fate as equity in government intervention / bankruptcy scenarios (i.e. dividneds cut and holders get zero in liquidation) but with none of the upside potential of common. so basically the seniority of prefs vs common is viewed as practically worthless and you have none of the optionality. hence the underperformance. Many currently consider prefs to be the no-mans land of the capital structure.