PFO: No Real Advantages Over Peers

2025-02-04 10:51:45 ET

Summary

• The Flaherty & Crumrine Preferred Income Opportunity Fund offers a 6.62% yield, but it underperforms compared to its peers in both yield and total return.
• Despite recent gains, the fund's long-term performance and high expense ratio make it less attractive than other preferred stock funds.
• The fund has a portfolio that consists almost entirely of preferred stocks, which is a bit different than the portfolios of some of its peers.
• The fund has been steadily increasing its distribution over the past year and it is fully covered.
• Investors might prefer equities, precious metals, and real estate over fixed-income funds like this one, especially in a potentially inflationary environment.

The Flaherty & Crumrine Preferred Income Opportunity Fund ( PFO ) is a closed-end fund that provides income-oriented investors a method through which they can achieve their goals of earning a very high level of current income from the assets in their portfolios. The fund manages to be only mediocre at this task as we will see in just a moment. First of all, the fund has a 6.62% yield at the current share price. This is only slightly better than the fixed-income indices, as shown here:

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