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First Trust Preferred Securities and Income Fund (FPEAX)
  • 2024 Estimated Capital Gain Distributions
    Certain First Trust Open-End Funds are expected to pay a long-term capital gain distribution in December. For a list of open-end funds expected to pay a long-term capital gain distribution, please click here. Also, certain First Trust Open-End Funds are expected to pay short-term capital gain distributions in December. For a list of open-end funds expected to pay a short-term capital gain distribution, please click here. Final determination of the source and tax status of all distributions paid in the current year are to be made after year-end and could differ from the expectations noted above.
Investment Objective/Strategy - The First Trust Preferred Securities and Income Fund seeks to provide current income and total return by investing, under normal market conditions, at least 80% of its net assets (including investment borrowings) in preferred securities and other securities with similar economic characteristics.
There can be no assurance that the Fund's investment objectives will be achieved. The Fund may not be appropriate for all investors.
Fund Overview
TickerFPEAX
Fund TypePreferred Income
Investment AdvisorFirst Trust Advisors L.P.
Portfolio Manager/Sub-AdvisorStonebridge Advisors LLC
CUSIP33738A107
Share ClassClass A
Fiscal Year-End10/31
Inception Date2/25/2011
Minimum Investment Amount$2,500
Minimum Subsequent Investment Amount$50
Maximum Initial Sales Charge4.50%
Total Expense Ratio*1.37%
Net Expense Ratio*1.37%
* As of 3/1/2024
Pursuant to contract, First Trust has agreed to waive fees and/or pay fund expenses to prevent the net expense ratio of any class of shares of the fund from exceeding 1.15% per year, excluding 12b-1 distribution and service fees, acquired fund fees and expenses and certain other expenses as described in the prospectus, through 2/28/2025, and to not exceed 1.50% per year from 3/01/2025 through 2/28/2034. Net expense ratio shown above includes acquired fund fees and certain other expenses as described in the prospectus.
Current Fund Data (as of 12/10/2024)
Net Asset Value1$19.89
Total Net Assets$236,030,481
Outstanding Shares2,089,130
NAV 52-Week High/Low$20.05 / $18.35
Top 10 Holdings (as of 11/29/2024)10
Holding Percent
Bank of America Corp., 6.13% 2.61%
Wells Fargo & Co., 7.50% 2.05%
Barclays PLC, 8.00% 1.80%
JPMorgan Chase & Co., 6.88% 1.76%
Energy Transfer L.P., 7.13% 1.71%
Intesa Sanpaolo S.p.A., 7.70% 1.68%
Lloyds Banking Group PLC, 8.00% 1.49%
Toronto-Dominion Bank (The), 8.13%, 10/31/82 1.45%
Bank of Montreal, 7.70%, 5/26/84 1.44%
Global Atlantic Fin Co., 4.70%, 10/15/51 1.40%
To download all holdings, click here.
Industry Breakdown (as of 11/29/2024)10
Industry Percent
Banks 47.86%
Insurance 13.00%
Capital Markets 10.03%
Oil, Gas & Consumable Fuels 7.09%
Electric Utilities 5.59%
Multi-Utilities 5.05%
Financial Services 3.78%
Food Products 2.84%
Wireless Telecommunication Services 1.66%
Independent Power and Renewable Electricity Producers 1.07%
Real Estate Management & Development 0.67%
Gas Utilities 0.39%
Retail REITs 0.34%
Trading Companies & Distributors 0.19%
Diversified Telecommunication Services 0.18%
Diversified REITs 0.16%
Automobiles 0.07%
Specialized REITs 0.03%
Security Type Breakdown (as of 11/29/2024)10
Security Percent
Fixed-to-Floating Rate and Fixed-to-Variable Rate Securities 82.79%
Fixed Rate Securities 15.95%
Floating Rate Securities 1.26%
Fund Characteristics (as of 11/29/2024)
Weighted Average Effective Duration64.33 Years
Weighted Average Yield-to-Worst76.50%
% Institutional Securities (e.g. $1000 par)884.97%
% Retail Securities (e.g. $25 par)915.03%
Weighted Average % of Par12100.44%
NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend FrequencyMonthly
Dividend per Share Amt (as of 12/11/2024)2$0.0883
30-Day SEC Yield (as of 10/31/2024)34.53%
Unsubsidized 30-Day SEC Yield (as of 10/31/2024)44.53%
Distribution Rate (as of 10/31/2024)55.35%
Credit Quality Breakdown (as of 11/29/2024)10
Credit Quality Percent
BBB+ 12.63%
BBB 27.83%
BBB- 35.41%
BB+ 12.59%
BB 6.47%
BB- 2.19%
B 0.67%
B- 0.58%
NR 1.63%
The credit quality and ratings information presented above reflect the ratings assigned by one or more nationally recognized statistical rating organizations (NRSROs), including S&P Global Ratings, Moody's Investors Service, Inc., Fitch Ratings, or a comparably rated NRSRO. For situations in which a security is rated by more than one NRSRO and the ratings are not equivalent, the highest rating is used. Sub-investment grade ratings are those rated BB+/Ba1 or lower. Investment grade ratings are those rated BBB-/Baa3 or higher. The credit ratings shown relate to the creditworthiness of the issuers of the underlying securities in the Fund, and not to the Fund or its shares. Credit ratings are subject to change.
Country Breakdown (as of 11/29/2024)10
Country Percent
United States 55.84%
Canada 13.43%
United Kingdom 8.16%
France 7.07%
Spain 2.75%
Netherlands 2.72%
Bermuda 2.59%
Mexico 2.30%
Italy 1.68%
Germany 1.53%
Sweden 0.54%
Switzerland 0.46%
Australia 0.38%
Japan 0.32%
Chile 0.23%
Month End Performance (as of 11/29/2024)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception11
Fund Performance *
Without Sales Charge 2.11% 11.12% 15.08% 1.47% 2.97% 4.61% 5.27%
With Sales Charge -2.49% 6.15% 9.90% -0.08% 2.02% 4.13% 4.92%
Index Performance **
ICE BofA US Investment Grade Institutional Capital Securities Index 1.94% 10.04% 13.65% 3.00% 3.87% 4.80% 5.78%
Blended Benchmark 1.80% 10.70% 14.28% 1.13% 2.85% 4.73% N/A
Bloomberg US Aggregate Bond Index -0.13% 2.93% 6.88% -1.95% -0.01% 1.52% 2.22%
Quarter End Performance (as of 9/30/2024)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception11
Fund Performance *
Without Sales Charge 5.36% 11.08% 18.80% 1.03% 3.34% 4.76% 5.34%
With Sales Charge 0.60% 6.11% 13.45% -0.51% 2.40% 4.27% 4.98%
Index Performance **
ICE BofA US Investment Grade Institutional Capital Securities Index 4.78% 10.05% 16.56% 2.53% 4.32% 4.92% 5.86%
Blended Benchmark 6.06% 11.19% 18.65% 0.78% 3.25% 4.98% N/A
Bloomberg US Aggregate Bond Index 5.20% 4.45% 11.57% -1.39% 0.33% 1.84% 2.36%

*Performance data quoted represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares when sold or redeemed, may be worth more or less than their original cost. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative.

**Performance information for each listed index is for illustrative purposes only and does not represent actual fund performance. Indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and an investor cannot invest directly in an index.

ICE BofA US Investment Grade Institutional Capital Securities Index - The Index tracks the performance of US dollar denominated investment grade hybrid capital corporate and preferred securities publicly issued in the US domestic market.

Blended Benchmark - The Benchmark consists of a 30/30/30/10 blend of the ICE BofA Core Plus Fixed Rate Preferred Securities Index, the ICE BofA US Investment Grade Institutional Capital Securities Index, the ICE USD Contingent Capital Index and the ICE BofA US High Yield Institutional Capital Securities Index. The Blended Benchmark is intended to reflect the proportional market cap of each segment of the preferred and hybrid securities market. The Blended Benchmark returns are calculated by using the monthly returns of the four indices during each period shown above. At the beginning of each month the four indices are rebalanced to a 30/30/30/10 ratio to account for divergence from that ratio that occurred during the course of each month. The monthly returns are then compounded for each period shown above, giving the performance for the Blended Benchmark for each period shown above.

ICE BofA Core Plus Fixed Rate Preferred Securities Index - The Index tracks the performance of fixed rate US dollar denominated preferred securities issued in the US domestic market.

ICE USD Contingent Capital Index - The Index tracks the performance of investment grade and below investment grade contingent capital debt publicly issued in the major domestic and eurobond markets.

ICE BofA US High Yield Institutional Capital Securities Index - The Index tracks the performance of US dollar denominated sub-investment grade hybrid capital corporate and preferred securities publicly issued in the US domestic market.

Bloomberg US Aggregate Bond Index - The Index covers the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS, ABS, and CMBS.

Footnotes
1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's outstanding shares.
2 Most recent distribution paid or declared to today's date. Subject to change in the future. There is no guarantee that the fund will declare dividends.
3 The 30-day SEC yield is calculated by dividing the net investment income per share earned during the most recent 30-day period by the maximum offering price per share on the last day of the period and includes the effects of fee waivers and expense reimbursements, if applicable.
4 The unsubsidized 30-day SEC yield is calculated the same as the 30-day SEC yield, however it excludes contractual fee waivers and expense reimbursements.
5 Distribution Rate is calculated by dividing the fund's most recent ordinary distribution paid or declared, on an annualized basis, by the NAV price. Distribution rates may vary.
6 A measure of a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield. It accounts for the likelihood of changes in the timing of cash flows in response to interest rate movements.
7 YTW is the worst possible annualized yield on a preferred security or bond without the issuer defaulting. Annualized yield is calculated at all call dates and to maturity or perpetuity, and the YTW is the lowest of all calculated yields. The calculation does not include the effect of fund fees and expenses.
8 Institutional Securities are predominantly $1000 par securities and only trade over-the-counter.
9 Retail Securities are predominantly $25 par securities but also include exchange-traded $20, $50, and $100 par securities.
10 Market value information used in calculating the percentages is based upon trade date plus one recording of transactions, which can differ from regulatory financial reports (Forms N-CSR and N-PORT Part F) that are based on trade date recording of security transactions. Holdings are subject to change.
11 Inception Date is 2/25/2011
12 The weighted average % of par reflects the average price of the fixed income securities within the portfolio as a % of the underlying face value. This is calculated as a weighted average using the market values of each security within the portfolio. A value above 100 indicates that the underlying securities are trading at a premium, on average, and a value below 100 indicates that the underlying securities are trading at a discount, on average. The face value of a bond is typically $100 or $1000 and the face value of an exchange-traded retail security is typically $25.

You should consider the fund's investment objectives, risks, and charges and expenses carefully before investing. You can download a prospectus or summary prospectus, or contact First Trust Portfolios L.P. at 1-800-621-1675 to request a prospectus or summary prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.

The Fund is subject to the following risks:

You could lose money by investing in a fund. An investment in a fund is not a deposit of a bank and is not insured or guaranteed. There can be no assurance that a fund’s objective(s) will be achieved. Please refer to each fund’s prospectus and Statement of Additional Information for additional details on a fund’s risks. The order of the below risk factors does not indicate the significance of any particular risk factor.

Banks are especially subject to the adverse effects of economic recession, currency exchange rates, government regulation, decreases in the availability of capital, volatile interest rates, portfolio concentrations in geographic markets and in commercial and residential real estate loans, as well as competition from new entrants. In addition, banks are subject to extensive regulation at both the federal and state level, which may affect permissible activities, profitability and the amount of capital that they must maintain.

During periods of falling interest rates if an issuer calls higher-yielding debt instruments, a fund may be forced to invest the proceeds at lower interest rates, likely resulting in a decline in the fund's income.

Contingent convertible securities ("CoCos") may provide for mandatory conversion into common stock of the issuer under certain circumstances. Since the common stock of the issuer may not pay a dividend, investors in these instruments could experience a reduced income rate, potentially to zero; and conversion would deepen the subordination of the investor, hence worsening standing in a bankruptcy.

A convertible security is exposed to risks associated with both equity and debt securities. The value of convertibles may rise and fall with the market value of the underlying stock or vary with changes in interest rates and credit quality of the issuer.

An issuer or other obligated party of a debt security may be unable or unwilling to make dividend, interest and/or principal payments when due and the value of a security may decline as a result.

Ratings assigned by a credit rating agency are opinions of such entities, not absolute standards of credit quality and they do not evaluate risks of securities. Any shortcomings or inefficiencies in the process of determining credit ratings may adversely affect the credit ratings of the securities held by a fund and their perceived or actual credit risk.

The differences in yield between debt securities of different credit quality may increase which may reduce the market value of a fund's debt securities.

Changes in currency exchange rates and the relative value of non-US currencies may affect the value of a fund's investments and the value of a fund's shares.

Current market conditions risk is the risk that a particular investment, or shares of the fund in general, may fall in value due to current market conditions. As a means to fight inflation, the Federal Reserve and certain foreign central banks have raised interest rates; however, the Federal Reserve has recently lowered interest rates and may continue to do so. Recent and potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. Ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States. The hostilities and sanctions resulting from those hostilities have and could continue to have a significant impact on certain fund investments as well as fund performance and liquidity. The COVID-19 global pandemic, or any future public health crisis, and the ensuing policies enacted by governments and central banks have caused and may continue to cause significant volatility and uncertainty in global financial markets, negatively impacting global growth prospects.

A fund is susceptible to operational risks through breaches in cyber security. Such events could cause a fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.

Investments in debt securities subject the holder to the credit risk of the issuer and the value of debt securities will generally change inversely with changes in interest rates. In addition, debt securities generally do not trade on a securities exchange making them less liquid and more difficult to value.

Depositary receipts may be less liquid than the underlying shares in their primary trading market and distributions may be subject to a fee. Holders may have limited voting rights, and investment restrictions in certain countries may adversely impact their value.

Political or economic disruptions in European countries, even in countries in which a fund is not invested, may adversely affect security values and thus the fund's holdings. A significant number of countries in Europe are member states in the European Union, and the member states no longer control their own monetary policies. In these member states, the authority to direct monetary policies, including money supply and official interest rates for the Euro, is exercised by the European Central Bank. The implications of the United Kingdom's withdrawal from the European Union are difficult to gauge and cannot yet be fully known.

Extension risk is the risk that, when interest rates rise, certain obligations will be paid off by the issuer (or other obligated party) more slowly than anticipated, causing the value of these debt securities to fall. Rising interest rates tend to extend the duration of debt securities, making their market value more sensitive to changes in interest rates.

Financial services companies are subject to the adverse effects of economic recession, currency exchange rates, government regulation, decreases in the availability of capital, volatile interest rates, portfolio concentration in geographic markets, industries or products, and competition from new entrants in their fields of business.

Fixed-to-floating rate securities are securities that have a fixed dividend rate for an initial term that converts to a floating dividend rate upon the expiration of the initial term. While fixed-to- floating rate securities can be less sensitive to interest rate risk than fixed-rate securities they generally carry lower yields than similar fixed- rate securities.

Floating rate securities are structured so that the security's coupon rate fluctuates based upon the level of a reference rate. As a result, the coupon on floating rate securities will generally decline in a falling interest rate environment, causing a fund to experience a reduction in the income it receives from the security. A floating rate security's coupon rate resets periodically according to the terms of the security. Consequently, in a rising interest rate environment, floating rate securities with coupon rates that reset infrequently may lag behind the changes in market interest rates.

High yield securities, or "junk" bonds, are less liquid and are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, are considered to be highly speculative.

Hybrid capital securities are subject to the risks of equity securities and debt securities. The claims of holders of hybrid capital securities are generally subordinated to those of holders of traditional debt securities in bankruptcy, and thus hybrid capital securities may be more volatile and subject to greater risk than traditional debt securities.

A fund's income may decline when interest rates fall or if there are defaults in its portfolio.

As inflation increases, the present value of a fund's assets and distributions may decline.

Interest rate risk is the risk that the value of the debt securities in a fund's portfolio will decline because of rising interest rates. Interest rate risk is generally lower for shorter term debt securities and higher for longer-term debt securities.

Large capitalization companies may grow at a slower rate than the overall market.

To the extent a fund invests in floating or variable rate obligations that use the London Interbank Offered Rate ("LIBOR") as a reference interest rate, it is subject to LIBOR Risk. LIBOR has ceased to be made available as a reference rate and there is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate ("SOFR"), will be similar to or produce the same value or economic equivalence as LIBOR. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on a fund or on certain instruments in which a fund invests is difficult to predict and could result in losses to the fund.

Certain fund investments may be subject to restrictions on resale, trade over-the-counter or in limited volume, or lack an active trading market. Illiquid securities may trade at a discount and may be subject to wide fluctuations in market value.

The portfolio managers of an actively managed portfolio will apply investment techniques and risk analyses that may not have the desired result.

Market risk is the risk that a particular security, or shares of a fund in general may fall in value. Securities are subject to market fluctuations caused by such factors as general economic conditions, political events, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious disease or other public health issues, recessions, natural disasters or other events could have significant negative impact on a fund.

Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, lack of liquidity, lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.

A fund and a fund's advisor may seek to reduce various operational risks through controls and procedures, but it is not possible to completely protect against such risks. The fund also relies on third parties for a range of services, including custody, and any delay or failure related to those services may affect the fund's ability to meet its objective.

Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred stocks are typically subordinated to other debt instruments in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments.

Prepayment risk is the risk that the issuer of a debt security will repay principal prior to the scheduled maturity date. Debt securities allowing prepayment may offer less potential for gains during a period of declining interest rates, as a fund may be required to reinvest the proceeds of any prepayment at lower interest rates.

Real Estate Investment Trusts ("REITs") are subject to the risks of investing in real estate, including, but not limited to, changes in the real estate market, vacancy rates and competition, volatile interest rates and economic recession. Increases in interest rates typically lower the present value of a REIT's future earnings stream and may make financing property purchases and improvements more costly. The value of a fund will generally decline when investors in REIT stocks anticipate or experience rising interest rates.

A fund may be unable to sell a restricted security on short notice or only sell them at a price below current value.

Senior Notes, or "baby bonds," are subject to the risk that the issuer or insurer of a baby bond may default on principal and/or interest payments when due which could affect the income generated by the Fund and/or the value of a baby bond. Baby bonds are also subject to typical risks associated with other fixed-income investments.

A fund with significant exposure to a single asset class, country, region, industry, or sector may be more affected by an adverse economic or political development than a broadly diversified fund.

Securities of small- and mid-capitalization companies may experience greater price volatility and be less liquid than larger, more established companies.

Securities issued or guaranteed by federal agencies and U.S. government sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. government.

A fund may hold securities or other assets that may be valued on the basis of factors other than market quotations. This may occur because the asset or security does not trade on a centralized exchange, or in times of market turmoil or reduced liquidity. Portfolio holdings that are valued using techniques other than market quotations, including "fair valued" assets or securities, may be subject to greater fluctuation in their valuations from one day to the next than if market quotations were used. There is no assurance that a fund could sell or close out a portfolio position for the value established for it at any time.

CUSIP identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by FactSet Research Systems Inc. and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2024 CUSIP Global Services. "CUSIP" is a registered trademark of the American Bankers Association.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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