Flaherty & Crumrine Preferred Securities Income Fund: A Leveraged Take on Preferred Equities

We hold a position in the Flaherty & Crumrine Preferred Securities Income Fund (NYSE:FFC), a fixed-income CEF that represents a leveraged take on preferred equities. FFC is a leveraged take on preferred equities, and we have covered this CEF before on Seeking Alpha. The CEF has a market capitalization of approximately $2 billion and has a 4.5% dividend yield. The fund's NAV has declined in recent months, and we are downgrading our rating on FFC due to the decline in NAV. Despite this, we believe the CEF's dividend yield remains attractive compared to other fixed-income investments.

Flaherty & Crumrine Preferred and Income Fund (NYSE:PFO) is a closed-end management investment company that aims to provide shareholders with high levels of current income and opportunities for capital appreciation. The fund primarily invests in preferred securities and other income-producing instruments, including non-cumulative and perpetual preferred stocks, hybrid securities, and convertible securities issued by U.S. and foreign corporations. It seeks to balance income generation with risk management through a disciplined investment approach centered on fundamental credit analysis [1].

The fund’s portfolio managers draw on the specialized research and trading capabilities of Flaherty & Crumrine, a firm established in 1993 and focused exclusively on preferred and hybrid securities. Utilizing a bottom-up security selection process, the team evaluates each issuer’s credit profile, dividend coverage, and interest rate sensitivity in order to construct a diversified portfolio. The fund may invest across a broad range of industries, with an emphasis on financial institutions, utilities, and energy companies that have historically issued preferred or hybrid securities to finance growth and capital requirements [1].

Since its inception in the mid-2000s, the fund has sought to capitalize on market inefficiencies in the preferred securities market by actively managing duration, credit quality, and sector allocation. The advisor employs risk-management tools and stress-testing scenarios to assess portfolio resilience under varying market conditions. Tactical exposure to global issues, including Canadian and European preferreds, can supplement U.S. holdings when valuation opportunities arise [1].

Flaherty & Crumrine Preferred and Income Fund serves both individual and institutional investors seeking a specialized fixed-income solution. The fund is governed by an independent Board of Directors charged with overseeing the advisor’s compliance with the investment objective and with safeguarding shareholder interests. The management team is based in Portland, Oregon, with additional research support in key financial centers [1].

Performance Update
As of July 2, 2025, Flaherty & Crumrine Preferred and Income Fund's stock was trading at $9.27, having increased by 2.9% from $9.01 on January 1, 2025 [2].

Investment Strategy
The fund’s investment strategy focuses on preferred equities, which are generally less volatile than common equities but offer higher yields. The fund's portfolio is diversified across various sectors, including financial institutions, utilities, and energy companies. By leveraging its expertise in preferred securities, the fund aims to generate consistent income while managing risk through disciplined credit analysis and active portfolio management [1].

Conclusion
Flaherty & Crumrine Preferred and Income Fund (NYSE:PFO) offers investors a specialized fixed-income solution with a focus on preferred securities. Despite recent declines in its NAV, the fund’s dividend yield remains attractive compared to other fixed-income investments. The fund's strategic approach to managing risk and capitalizing on market inefficiencies makes it an attractive option for investors seeking income generation and potential capital appreciation.

References
[1] https://www.marketbeat.com/stocks/NYSE/PFO/
[2] https://www.marketbeat.com/stocks/NYSE/PFO/