Nuveen Quality Preferred Stock Fund (JTP)

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Investing in preferred stocks can be done several different ways like individual preferred stocks, mutual funds, exchange traded funds, and closed end funds (CEFs). Investing in closed end fund (CEF) is not as popular as investing in exchange traded fund (ETF).

There are pros and cons. I may discuss in my future article. In this article, I’ll focus in investing in preferred stock CEF. One of this CEF is Nuveen Quality Preferred Income Fund (Ticker: JTP).

Nuveen Quality Preferred Income (JTP)

This Nuveen Quality Preferred Income fund objective is to provide consistent high current income and preservation of capital. It also tries to enhance portfolio value. The fund will invest majority of its assets, more than 80%, in preferred securities and <20% of its assets in debt obligations like convertible debt and convertible preferred securities. The investment assets in these securities are investment grade quality (BBB/Baa or better). This fund may use leverage to increase its income.

Nuveen Quality Preferred Stock Fund (JTP)Since 2002, L. Phillip Jacoby and Mark A Lieb have been the lead manager of this Nuveen fund. This best preferred stock CEF has a yield of 7.82%. It consists of $537 million total common assets. The fund annual expense is 1.60% (include 1.10% management fees, 0.09% other expenses, and 0.40% interest expense). This fund has an effective leverage of 22.36% as of March 2011. The inception share price is $15.00 and the inception NAV is $14.33. The fund has paid a total of $8.52 dividend for the past 9 years.

As of February 2011, the fund consists of 170 holdings. It also has 30.9% foreign holdings. The fund top 10 holdings are Fisrtar Realty llc debt, AXA SA debt, Viacom Inc debt, Wells Fargo and Co debt, Capital One Financial debt, Kimco Realty pfd, Aegon NV preferred, Vodafone Group debt, HSBC holdings debt, and Banco Santander SA debt. The top 5 industries include insurance (31.7%), commercial banks (26.1%), real estate investment trust REIT (11.5%), media (5.7%), and capital markets (5.1%).

Why interesting?

Reasons I like this Nuveen fund are:
Best Closed End Fund
  • This preferred stock fund has a high yield of 7.82% per year. None of this yield is part of return of capital.
  • It has positive average UNII of $0.1415 per share (As of February 2011)
  • The fund market price is traded below its NAV
  • Reasonable expense ratio
You may also interested in these Nuveen funds
  • Nuveen Quality Preferred Income Fund 2 (Ticker: JPS)
  • Nuveen Quality Preferred Income Fund 3 (Ticker: JHP)
Any investments involve risk, investing in this fund may have risks such as:
  • Investment and market risk
  • Interest rate risk
  • Call risk or prepayment risk
  • Reinvestment risk
  • Credit risk
  • Preferred stock risk
  • Leverage risk
Disclosure: No Position

Since CEFs are traded like stocks, you can buy and sell these CEFs using online stock brokerage. For cheap and great brokerages, please check my best brokerages page. update on 5/20/2012 As of May 2012, the distribution rate is 7.61% per year. This closed end fund is rated with 2 stars and neutral rating by Morningstar.