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Flaherty & Crumrine Preferred and Income Securities Fund
Donald Crumrine's closed-end preferred securities fund, listed on NYSE as PFD, invests in bank and insurance preferreds. ~$110M in net assets.
Flaherty & Crumrine Preferred and Income Securities Fund
Flaherty & Crumrine Preferred and Income Securities Fund launched in 2003 as a New York Stock Exchange-listed closed-end fund trading under the ticker PFD. Donald F. Crumrine serves as chairman and R. Eric Chadwick as president, continuing the Flaherty & Crumrine franchise that has specialized in preferred and income-oriented securities since the 1980s. The fund's inception extended the firm's institutional preferred-securities capabilities into a vehicle accessible to retail and high-net-worth investors through brokerage accounts. The fund invests at least 80% of its assets in a concentrated portfolio of preferred and other income-producing securities, with heavy weightings toward the financial sector — primarily large US and European banks, insurance companies, and their regulatory-capital instruments. Holdings as reported in public filings include preferred shares of Bank of America, JPMorgan Chase, Wells Fargo, and MetLife. The portfolio blends fixed-to-floating rate securities, traditional fixed-rate preferreds, and trust-preferred structures, targeting high current income with a secondary emphasis on capital preservation. Geographic exposure skews domestically but includes select European bank issuers. As a closed-end fund, the vehicle employs moderate leverage to enhance yield, a structural feature common in the preferred-asset category. The fund's net asset value and market price are publicly daily, and the vehicle maintains a managed distribution policy, paying monthly dividends to shareholders. In September 2023, SEC filings confirmed the fund continued to operate under the same management contract with Flaherty & Crumrine Incorporated as investment adviser, with no material changes to fee structure or investment policy. The fund's structural differentiator is its listed closed-end wrapper, which creates an arbitrage between net asset value and market price that institutional allocators can exploit. Unlike open-end mutual funds or separate accounts that transact at NAV, PFD's shares trade at premiums or discounts to their underlying asset value, introducing an entry-timing dimension absent from private preferred-asset allocations. This structure also provides intraday liquidity for a typically illiquid institutional asset class, a feature that peer preferred-asset managers generally do not offer.
General information
Firm type
Asset Manager
Year founded
2003
AUM
Undisclosed
Location
Region
North America
Country
United States
City
Pasadena
Corporate office
Pasadena, CA, United States
Principals
R. Eric Chadwick
President
Donald F. Crumrine
Chairman
Sector focus
Frequently asked questions
Who runs investment decisions at the Flaherty & Crumrine Preferred and Income Securities Fund?
Donald F. Crumrine serves as chairman and R. Eric Chadwick as president of the fund. Both are senior principals at Flaherty & Crumrine Incorporated, the fund's investment adviser, which has managed preferred-securities portfolios since the 1980s. The adviser makes all buy-sell decisions and sets the fund's leverage and distribution policies.
How does the fund differ from an open-end preferred-securities mutual fund?
The fund is a closed-end vehicle listed on the New York Stock Exchange. This means shares trade throughout the day at a market price that can deviate from net asset value, creating premium or discount dynamics not present in open-end funds. The closed-end structure also permits the fund to use leverage and maintain a managed monthly distribution policy without facing shareholder redemptions that could force asset sales at inopportune times.
What types of securities does the fund hold?
At least 80% of the portfolio is invested in preferred and other income-producing securities, predominantly those issued by financial institutions. Specific categories include fixed-rate preferred stock, fixed-to-floating rate preferreds, trust-preferred securities, and contingent capital instruments from large US and European banks and insurers. The balance may hold corporate bonds or other income-producing assets.
Which sectors does the fund concentrate on, and which does it avoid?
The fund concentrates heavily on the financial sector — principally large-cap US banks and insurers like Bank of America, JPMorgan Chase, and MetLife — with selective European financials. It explicitly avoids speculative-grade preferreds and generally does not invest in equity common stock of these issuers, maintaining its focus on senior and structurally senior income instruments.
Does the fund use leverage, and if so, how?
Yes, the fund employs leverage, typically through preferred shares or debt issued at the fund level, to enhance yield on the underlying portfolio. This is a standard feature of institutional preferred-securities management and is disclosed in quarterly SEC filings. The leverage ratio fluctuates but has historically been modest relative to the fund's total assets.
How is the fund related to other Flaherty & Crumrine vehicles?
The Preferred and Income Securities Fund is one of several listed closed-end funds managed by Flaherty & Crumrine Incorporated, alongside sister vehicles such as the Flaherty & Crumrine Preferred Securities Income Fund (FFC) and Flaherty & Crumrine Total Return Fund (FLC). All share the same investment adviser, overlapping portfolio management teams, and a common focus on institutional preferred and income securities.
What is the fund's dividend posture?
The fund maintains a managed distribution policy, paying monthly dividends derived from net investment income and, when necessary, from capital gains or return of capital. The monthly frequency is designed to appeal to income-oriented retail and high-net-worth investors who use the vehicle for current cash flow. Tax character of distributions is reported annually on Form 1099-DIV.
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