BMO Canadian ETF Dashboard

Thank you for printing our content at https://www.bmoetfs.ca/en/trade-tips/canadian-preferred-shares-zpr.

Canadian Preferred Shares (ZPR)

Home Page

Canadian Preferred Shares (ZPR)

  • Yields continue to rise with the Government of Canada 10-year Benchmark Bond recently hitting 1.5% - a pre-pandemic level not seen since January, 2020. This has been largely driven off the U.S. yield curve, where we have seen a continued steepening in the curve. Long-term rates have risen on a number of factors including, further optimism of an economic reopening, growing inflation concerns and expectations that the Fed will have to taper its asset purchase programs at some point.
  • The quick rise in yields led risky-assets to pare back gains. Since rates began rising in mid-February, the S&P 500 Composite has fallen 3.0% and the S&P/TSX Composite has fallen 2.2%. The bond market has also felt the effects of higher yields with the FTSE/TMX Canada Bond Universe falling 1.0% over the same period. Preferred shares have continued to hold steady. However, the BMO Laddered Preferred Share Index ETF (ZPR) has gained 0.83% since mid-February, and jumped 9.0% on a total return basis year-to-date.
  • Despite Canadian preferred shares being the top-performing asset class since the market bottomed out in late March of last year, we believe there are still tailwinds that remain, such as:
    • The likely rise in rates, which will continue as the economy approaches a re-opening, leading to further inflation/reflationary pressures
    • Ongoing issuance of Limited Resource Capital Notes (LRCN) and Hybrid bonds, where capital is used to redeem outstanding Canadian preferred shares  
    • Interest rates remaining low on an absolute level, particularly on the front end, which favours yield-oriented assets such as preferred shares. 

ZPR Statistics - Duration 3.11 | 5-Year | 0.91% | Date: March 5, 2021

Reset Year Issues Weight Average Reset Spread Average Coupon Avg Premium > 0% Current Yield Implied Current Yield YTC YTM YTW YTE
2021 32 16.81% 414.31 4.96% -3.57% 18 5.11% 5.20% 17.95% 5.04% 2.66% 2.66%
2022 38 19.89% 342.44 4.60% -5.45% 14 4.90% 4.59% 10.15% 4.79% 4.21% 4.24%
2023 35 20.81% 272.41 4.88% -10.79% 3 5.55% 4.10% 11.72% 5.42% 5.33% 5.43%
2024 47 22.37% 272.23 4.31% -12.78% 10 4.99% 4.20% 9.17% 5.22% 5.06% 5.17%
2025 36 19.04% 278.12 3.66% -14.25% 3 4.31% 4.34% 8.14% 5.44% 5.14% 5.38%
2026 5 1.08% 207.73 2.71% -40.01% 1 4.46% 4.98% 14.61% 4.93% 4.88% 4.88%
Portfolio 193 100.00% 310.53 4.45% -9.93% 49 4.97% 4.46% 11.23% 5.19% 4.56% 4.65%
Level 1 Issues % Average Reset Spread Average Coupon Avg Premium > 0% Current Yield Implied Current Yield YTC YTM YTW YTE
Communications 10 3.03% 127.31 3.71% -30.44% 0 5.32% 3.08% 45.68% 5.11% 5.11% 5.11%
Consumer, Non-Cyclical 4 0.91% 471.66 6.21% 0.74% 3 6.17% 5.58% 6.13% 5.77% 5.52% 6.00%
Diversified 2 0.54% 280.02 3.82% -23.10% 0 4.94% 4.83% 11.64% 8.24% 7.90% 8.24%
Energy 40 22.67% 306.57 4.40% -18.87% 5 5.47% 4.91% 12.58% 6.22% 5.69% 5.81%
Financial 102 60.36% 315.81 4.42% -5.85% 28 4.69% 4.31% 9.15% 4.53% 3.80% 3.87%
Utilities 35 12.49% 326.32 4.80% -8.68% 13 5.27% 4.57% 10.85% 6.30% 5.83% 5.96%
Portfolio 193 100.00% 310.53 4.45% -9.93% 49 4.97% 4.46% 11.23% 5.19% 4.56% 4.65%
Credit Rating Issues Weight Average Reset Spread Average Coupon Avg Premium > 0% Current Yield Implied Current Yield YTC YTM YTW YTE
P1 7 2.03% 248.51 3.71% -10.38% 0 4.09% 3.79% 11.67% 4.87% 4.70% 4.87%
P2 124 77.21% 304.47 4.36% -8.92% 37 4.81% 4.33% 9.44% 4.94% 4.20% 4.30%
P3 62 20.76% 339.14 4.88% -13.68% 12 5.68% 5.00% 17.87% 6.13% 5.87% 5.96%
Portfolio 193 100.00% 310.53 4.45% -9.93% 49 4.97% 4.46% 11.23% 5.19% 4.56% 4.65%
Level Issue % Average Reset Spread Average Coupon Avg Premium > 0% Current Yield Implied Current Yield YTC YTM YTW YTE
Banks 50 39.60% 318.55 4.43% -2.77% 22 4.53% 4.18% 4.73% 4.32% 3.34% 3.43%
Commercial Services 4 0.91% 471.66 6.21% 0.74% 3 6.17% 5.58% 6.13% 5.77% 5.52% 6.00%
Diversified Finan Serv 1 0.17% 544.00 6.5% -0.40% 0 6.53% 6.37% 8.73% 6.62% 6.62% 6.62%
Electric 31 11.42% 324.54 4.78% -8.79% 12 5.25% 4.56% 11.10% 6.42% 5.91% 6.05%
Gas 4 1.07% 345.28 5.05% -7.54% 1 5.50% 4.72% 8.16% 4.94% 4.94% 5.03%
Holding Companies-Divers 2 0.54% 280.02 3.82% -23.10% 0 4.94% 4.83% 11.64% 8.24% 7.90% 8.24%
Insurance 28 11.16% 293.93 4.25% -9.38% 3 4.68% 4.24% 12.06% 4.76% 4.28% 4.39%
Investment Companies 1 0.18% 396.00 5.85% 3.16% 1 5.67% 4.72% 4.48% 5.63% 4.48% 4.48%
Media 1 0.18% 200.00 2.79% -40.20% 0 4.67% 4.86% 214.09% 4.91% 4.91% 4.91%
Oil & Ga 4 1.33% 314.54 4.09% -29.17% 0 5.72% 5.70% 13.54% 5.76% 5.76% 5.76%
Pipelines 36 21.34% 306.07 4.42% -18.23% 5 5.46% 4.86% 12.52% 6.25% 5.68% 5.81%
Private Equity 12 5.65% 303.19 4.23% -12.49% 2 4.81% 4.49% 17.34% 4.62% 4.55% 4.55%
Real Estate 9 3.26% 354.78 4.83% -20.74% 0 6.11% 5.63% 39.04% 5.90% 5.90% 5.90%
REITS 1 0.34% 393.00 6.00% -3.52% 0 6.22% 5.01% 8.25% 6.28% 6.28% 6.28%
Telecommunications 9 2.85% 122.76 3.77% -29.83% 0 5.37% 2.97% 35.14% 5.12% 5.12% 5.12%
Portfolio 193 100.00% 310.53 4.45% -9.93% 49 4.97% 4.46% 11.23% 5.19% 4.56% 4.65%


Source: BMO Global Asset Management, as of March 5, 2021.

Canadian Preferred Shares (ZPR)

  • Yields continue to rise with the Government of Canada 10-year Benchmark Bond recently hitting 1.5% - a pre-pandemic level not seen since January, 2020. This has been largely driven off the U.S. yield curve, where we have seen a continued steepening in the curve. Long-term rates have risen on a number of factors including, further optimism of an economic reopening, growing inflation concerns and expectations that the Fed will have to taper its asset purchase programs at some point.
  • The quick rise in yields led risky-assets to pare back gains. Since rates began rising in mid-February, the S&P 500 Composite has fallen 3.0% and the S&P/TSX Composite has fallen 2.2%. The bond market has also felt the effects of higher yields with the FTSE/TMX Canada Bond Universe falling 1.0% over the same period. Preferred shares have continued to hold steady. However, the BMO Laddered Preferred Share Index ETF (ZPR) has gained 0.83% since mid-February, and jumped 9.0% on a total return basis year-to-date.
  • Despite Canadian preferred shares being the top-performing asset class since the market bottomed out in late March of last year, we believe there are still tailwinds that remain, such as:
    • The likely rise in rates, which will continue as the economy approaches a re-opening, leading to further inflation/reflationary pressures
    • Ongoing issuance of Limited Resource Capital Notes (LRCN) and Hybrid bonds, where capital is used to redeem outstanding Canadian preferred shares  
    • Interest rates remaining low on an absolute level, particularly on the front end, which favours yield-oriented assets such as preferred shares. 

ZPR Statistics - Duration 3.11 | 5-Year | 0.91% | Date: March 5, 2021

Reset Year Issues Weight Average Reset Spread Average Coupon Avg Premium > 0% Current Yield Implied Current Yield YTC YTM YTW YTE
2021 32 16.81% 414.31 4.96% -3.57% 18 5.11% 5.20% 17.95% 5.04% 2.66% 2.66%
2022 38 19.89% 342.44 4.60% -5.45% 14 4.90% 4.59% 10.15% 4.79% 4.21% 4.24%
2023 35 20.81% 272.41 4.88% -10.79% 3 5.55% 4.10% 11.72% 5.42% 5.33% 5.43%
2024 47 22.37% 272.23 4.31% -12.78% 10 4.99% 4.20% 9.17% 5.22% 5.06% 5.17%
2025 36 19.04% 278.12 3.66% -14.25% 3 4.31% 4.34% 8.14% 5.44% 5.14% 5.38%
2026 5 1.08% 207.73 2.71% -40.01% 1 4.46% 4.98% 14.61% 4.93% 4.88% 4.88%
Portfolio 193 100.00% 310.53 4.45% -9.93% 49 4.97% 4.46% 11.23% 5.19% 4.56% 4.65%
Level 1 Issues % Average Reset Spread Average Coupon Avg Premium > 0% Current Yield Implied Current Yield YTC YTM YTW YTE
Communications 10 3.03% 127.31 3.71% -30.44% 0 5.32% 3.08% 45.68% 5.11% 5.11% 5.11%
Consumer, Non-Cyclical 4 0.91% 471.66 6.21% 0.74% 3 6.17% 5.58% 6.13% 5.77% 5.52% 6.00%
Diversified 2 0.54% 280.02 3.82% -23.10% 0 4.94% 4.83% 11.64% 8.24% 7.90% 8.24%
Energy 40 22.67% 306.57 4.40% -18.87% 5 5.47% 4.91% 12.58% 6.22% 5.69% 5.81%
Financial 102 60.36% 315.81 4.42% -5.85% 28 4.69% 4.31% 9.15% 4.53% 3.80% 3.87%
Utilities 35 12.49% 326.32 4.80% -8.68% 13 5.27% 4.57% 10.85% 6.30% 5.83% 5.96%
Portfolio 193 100.00% 310.53 4.45% -9.93% 49 4.97% 4.46% 11.23% 5.19% 4.56% 4.65%
Credit Rating Issues Weight Average Reset Spread Average Coupon Avg Premium > 0% Current Yield Implied Current Yield YTC YTM YTW YTE
P1 7 2.03% 248.51 3.71% -10.38% 0 4.09% 3.79% 11.67% 4.87% 4.70% 4.87%
P2 124 77.21% 304.47 4.36% -8.92% 37 4.81% 4.33% 9.44% 4.94% 4.20% 4.30%
P3 62 20.76% 339.14 4.88% -13.68% 12 5.68% 5.00% 17.87% 6.13% 5.87% 5.96%
Portfolio 193 100.00% 310.53 4.45% -9.93% 49 4.97% 4.46% 11.23% 5.19% 4.56% 4.65%
Level Issue % Average Reset Spread Average Coupon Avg Premium > 0% Current Yield Implied Current Yield YTC YTM YTW YTE
Banks 50 39.60% 318.55 4.43% -2.77% 22 4.53% 4.18% 4.73% 4.32% 3.34% 3.43%
Commercial Services 4 0.91% 471.66 6.21% 0.74% 3 6.17% 5.58% 6.13% 5.77% 5.52% 6.00%
Diversified Finan Serv 1 0.17% 544.00 6.5% -0.40% 0 6.53% 6.37% 8.73% 6.62% 6.62% 6.62%
Electric 31 11.42% 324.54 4.78% -8.79% 12 5.25% 4.56% 11.10% 6.42% 5.91% 6.05%
Gas 4 1.07% 345.28 5.05% -7.54% 1 5.50% 4.72% 8.16% 4.94% 4.94% 5.03%
Holding Companies-Divers 2 0.54% 280.02 3.82% -23.10% 0 4.94% 4.83% 11.64% 8.24% 7.90% 8.24%
Insurance 28 11.16% 293.93 4.25% -9.38% 3 4.68% 4.24% 12.06% 4.76% 4.28% 4.39%
Investment Companies 1 0.18% 396.00 5.85% 3.16% 1 5.67% 4.72% 4.48% 5.63% 4.48% 4.48%
Media 1 0.18% 200.00 2.79% -40.20% 0 4.67% 4.86% 214.09% 4.91% 4.91% 4.91%
Oil & Ga 4 1.33% 314.54 4.09% -29.17% 0 5.72% 5.70% 13.54% 5.76% 5.76% 5.76%
Pipelines 36 21.34% 306.07 4.42% -18.23% 5 5.46% 4.86% 12.52% 6.25% 5.68% 5.81%
Private Equity 12 5.65% 303.19 4.23% -12.49% 2 4.81% 4.49% 17.34% 4.62% 4.55% 4.55%
Real Estate 9 3.26% 354.78 4.83% -20.74% 0 6.11% 5.63% 39.04% 5.90% 5.90% 5.90%
REITS 1 0.34% 393.00 6.00% -3.52% 0 6.22% 5.01% 8.25% 6.28% 6.28% 6.28%
Telecommunications 9 2.85% 122.76 3.77% -29.83% 0 5.37% 2.97% 35.14% 5.12% 5.12% 5.12%
Portfolio 193 100.00% 310.53 4.45% -9.93% 49 4.97% 4.46% 11.23% 5.19% 4.56% 4.65%


Source: BMO Global Asset Management, as of March 5, 2021.

« » icon to trigger sliding panel Sign Up

Stay Informed

Sign-up to receive weekly emails publications from BMO Global Asset Management.

* Mandatory fields

Thank you for subscribing.

This email is intended for informational purposes only. Investments should be evaluated relative to the individual's investment objectives. The information contained in this newsletter should not be construed as investment and/or tax advice to any party. The statements and statistics contained herein are based on material believed to be reliable but may not be accurate or complete.

FOR ADVISOR USE ONLY.

By submitting this form, you consent to receiving the publications you have chosen at the email address you have provided. You can manage your subscription through the links we provide in our emails. Your email address will only be used for the purpose of providing you with the publications you have requested.