Principal Financial’s Unit Launches Tax-Advantaged Active ETF

Principal Financial Group, Inc.’s PFG unit Principal Global Investors has unveiled the Principal Spectrum Tax-Advantaged Dividend Active ETF (PQDI), which will enable investors to get access to qualified dividend income. The fund invests in securities from all sectors of the global U.S. dollar capital securities market.

PQDI is an exchange-traded fund, incorporated in USA, which seeks to provide current income. The fund primarily invests in global preferred securities and capital securities eligible to pay dividends that qualify for favorable U.S. federal income tax treatment, along with other securities not eligible for such treatment. This is the first ETF in the market, which targets exposure to qualified dividends designed to help U.S. taxpayers boost their after-tax income.

PQDI remains exposed to preferred securities, which provide tax-advantaged income. It selects higher-quality preferred and capital securities with improving credits and seeks to avoid speculative risks so as to deliver attractive risk adjusted returns.

In 2017, Principal Financial had launched the Principal Spectrum Preferred Securities Active ETF (PREF) on Bats Exchange, which is managed by Spectrum Asset Management, an investment team within Principal. The investment seeks to provide current income. It invests more than 25% of its net assets in securities in one or more industries within the financial services sector. PQDI is the second ETF managed by Spectrum.

In 2019, Principal Global Investors expanded its ETF platform with the launch of the three new multi-factor ETFs to serve as the foundation of investors’ portfolio and to them additional choices for building portfolios.

Principal Global Investors segment manages assets for sophisticated investors around the world using focused investment teams with diverse investment capabilities including equity, fixed income, real estate and other alternative investments. It provides asset management services to Principal Financial’s asset accumulation business, insurance operations, the Corporate segment and third-party clients. The U.S. invested assets are managed primarily by Principal Global Investors segment of Principal Financial.  As of Dec 31, 2019, Principal Global Investors and its focused investment teams had over 750 third party institutional clients in 40 countries with $111.0 billion of AUM.

Shares of this Zacks Rank #3 (Hold) financial services provider have lost 21% in a year, underperforming its industry’s decline of 6.7%. Nevertheless, we believe that the company’s strong fundamentals are likely to drive its shares, going forward.


Stocks to Consider

Some better-ranked stocks in the finance space are AllianceBernstein Holding LP AB, BrightSphere Investment Group Inc BSIG and Cohen Steers Inc CNS, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AllianceBernstein is a publicly owned investment manager. It provides research services to its clients. It surpassed estimates in three of the last four quarters, with the average positive surprise being 4.47%.

BrightSphere is a publically owned asset management holding company. It provides its services to individuals and institutions. It surpassed estimates in three of the last four quarters, with the average positive surprise being 3.89%.

Cohen & Steers is a publicly owned asset management holding company. It provides its services to institutional investors, including pension funds, endowments, and foundations. It surpassed estimates in two of the last four quarters, with the average positive surprise being 1.11%.

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