you are leaving Destracapital.com

It is important to note that by clicking on this link you will be leaving this website and any information viewed there is not the property of Destra Capital Investments LLC.

 

Achieving Preferred Outcomes

Destra Capital

August 30, 2019

A goal common to seemingly all investors should be to generate higher portfolio returns with less risk. Adding the diversification of preferred securities may help to achieve this Preferred Outcome.

Low correlation coupled with strong risk and return characteristics make preferred securities (represented by our Destra Flaherty & Crumrine Preferred and Income Fund, ticker symbol DPIIX, the "Fund") an attractive core holding within portfolios. Three things to note from the chart below (all based on broad market indexes compared to our Fund since it's inception):

Source: Morningstar. Data from 6/30/2011 to 6/30/2019.

Definitions: Destra (DPIIX) = Destra Flaherty & Crumrine Preferred and Income Fund I Share; S&P 500 = S&P 500 TR; EM Bonds = JPM EMBI Plus TR; DM Bonds = FTSE Citi WGBI non-USD TR; Muni Bonds = Bloomberg Barclays Muni TR; US LT Govt Bonds = IA SBBI LT Government TR; Sr. Loans = Credit Suisse Leveraged Loan TR; US TIP = ICE BofAML US Inflation Linked TR; US HY = IA Barclays High Yield Corp TR; US Corp = IA SBBI LT Corporate TR; US Agg = Barclays US Aggregate Bond TR; T-Bills = IA SBBI TBill TR; DM Stocks = MSCI EAFE TR; EM Stocks = MSCI EM TR; REITs = FTSE NAREIT All Equity TR; Gold = London PM Spot Gold; Commodities = S&P GSCI TR; Hedge = Credit Suisse Hedge Fund Index. All information is historical and for illustrative purposes only. Past performance does not guarantee future results.

A Preferred Diversifier to Bonds

Preferreds may be an attractive diversifier to bond asset classes, with a 50/50 combination of the Fund and each unique bond index, improving overall risk/return characteristics as shown in the chart below.

We have plotted the risk/return of the following asset classes: US Government Bonds, US Municipal Bonds, Developed Market Bonds, and Emerging Market Bonds. To show you the diversification benefits of preferreds, we construct a 50/50 combination of each individual asset class and the Fund.

Source: Morningstar. Data from 6/30/2011 to 6/30/2019.

Definitions: Destra (DPIIX) = Destra Flaherty & Crumrine Preferred and Income Fund I Shares; EM Bonds = JPM EMBI Plus TR; DM Bonds = FTSE Citi WGBI non-USD TR; Muni Bonds = Bloomberg Barclays Muni TR; US Govt Bonds = IA SBBI IT Government TR; EM 50-50 = 50% EM Bonds and 50% Destra (DPIIX); DM 50-50 = 50% DM Bonds and 50% Destra (DPIIX); Muni 50-50 = 50% Muni Bonds and 50% Destra (DPIIX); US Govt 50-50 = 50% US Govt Bonds and 50% Destra (DPIIX). All portfolios are rebalanced annually at year end. All information is historical and for illustrative purposes only. Past Performance does not guarantee future results.

A Preferred Diversifier to Stocks

Preferreds may also be an attractive diversifier to equity asset classes, as the 50/50 combinations of common equity indexes and our Fund show improving overall risk/return characteristics.

Using the same methodology from the previous chart, we plot the risk/return of the following asset classes: US Large Cap Stocks (S&P500), Developed Market Large Cap Stocks (MSCI EAFE), and Emerging Market Stocks (MSCI EM). The diversification benefits of preferreds is represented by the 50/50 combination of each individual asset class and the Fund.

Source Morningstar. Data from 6/30/2011 to 6/30/2019.

Definitions: Destra (DPIIX) = Destra Flaherty & Crumrine Preferred and Income Fund I Shares; S&P 500 = S&P 500 TR; MSCI EAFE = MSCI EAFE TR; MSCI EM = MSCI EM TR; S&P 500 50-50 = 50% S&P 500 TR and 50% Destra (DPIIX); MSCI EAFE 50-50 = 50% MSCI EAFE TR and 50% Destra (DPIIX); MSCI EM 50-50 = 50% MSCI EM TR and 50% Destra (DPIIX). All portfolios are rebalanced annually at year end. All information is historical and for illustrative purposes only. Past Performance does not guarantee future results.

A Preferred Diversifier to Alternatives

Preferreds may also be an attractive diversifier to alternative asset classes, with a 50/50 combination improving overall risk/return characteristics.

Let's finally take a look at preferreds in relation to four major alternative asset classes. With the same methodology as the previous two charts, we plot the risk/return of the following asset classes: Hedge Funds, REITs, Gold and Commodities. Just like Bonds & Stocks, the Fund is a very attractive diversifier to alternatives, once again improving the overall risk/return characteristics.

Source Morningstar. Data from 6/30/2011 to 6/30/2019.

Definitions: Destra (DPIIX) = Destra Flaherty & Crumrine Preferred and Income Fund I Shares; Hedge = Credit Suisse Hedge Fund Index; REITs = FTSE NAREIT All Equity TR; Gold = London PM Gold; Commodities = S&P GSCI TR; Hedge 50-50 = 50% Hedge and 50% Destra (DPIIX); REIT 50-50 = 50% REITs and 50% Destra (DPIIX); Gold 50-50 = 50% Gold and 50% Destra (DPIIX); Commodities 50-50 = 50% Commodities and 50% Destra (DPIIX). All portfolios are rebalanced annually at year end. All information is historical and for illustrative purposes only. Past Performance does not guarantee future results.

Investing in the Destra Flaherty & Crumrine Preferred and Income Fund is all about “Achieving Preferred Outcomes” – generating higher portfolio returns with less risk.


Investors should consider the investment objectives and policies, risk considerations, charges, and ongoing expenses of an investment carefully before investing. The prospectus contains this and other information relevant to an investment in the Fund. Please read the prospectus carefully before you invest or send money. To obtain a prospectus, please contact your investment representative or Destra Capital Investments LLC or download a PDF here.

Risk is inherent in all investing. The value of your investment in the Fund, as well as the amount of return you receive on your investment, may fluctuate significantly from day to day and over time. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. The risks of the Fund will result from both the Fund’s direct investments and its indirect investments made through the Subsidiary. Accordingly, the risks that result from the Subsidiary’s activities will be described herein as the Fund’s risks.