Flaherty & Crumrine Preferred and Income Fund (NYSE:PFO) is a closed-end management investment company designed to provide investors with a high level of current income. The fund focuses its portfolio primarily on preferred and participating securities, including traditional preferred shares, convertible preferred instruments, trust preferred issues and other hybrid securities issued by corporations and financial institutions.
Through broad diversification across industry sectors and geographies, PFO aims to manage credit and interest-rate risk while pursuing attractive yield opportunities. The fund typically allocates at least 80% of its assets to preferred and participating securities, and it may supplement its holdings with other income-oriented instruments such as corporate bonds, bank debt and selected common stocks to enhance total return potential.
The portfolio is subadvised by Flaherty & Crumrine Incorporated, an investment advisor based in Cincinnati, Ohio, with a specialization in preferred-securities strategies since the early 1980s. The management team applies fundamental credit analysis and relative-value evaluation to identify securities they believe offer favorable risk-adjusted yields. In pursuit of income enhancement, PFO may employ modest leverage under guidelines established by the Investment Company Act of 1940.
By combining a focus on higher-yielding fixed-income instruments with the structural characteristics of a closed-end fund, Flaherty & Crumrine Preferred and Income Fund provides investors with access to a diversified portfolio that seeks to deliver current income and potential long-term capital preservation within a single investment vehicle.
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