Reduction in Financial Preferred ETF

Posted by Tim

September 26, 2008

As I am now actively managing this site’s Income Portfolio, I am trying to decide how much of the trading I want to share in posts. Right now I am leaning towards putting up a notice when I make a major position change or something similar. Today I decided to reduce the position in the PowerShares Financial Preferred ETF (PGF: 14.71 +0.75 +5.37%) by about 2/3. The portfolio started out on 7/1/08 with a 10% position in 10 stocks including PGF and in early September I started actively managing the portfolio and have made a few position changes in the last couple of weeks. The moves were primarily to reduce the weighting in a couple of stocks and increase the cash position.

Today I decided to make a significant reduction in PGF following the FDIC take over of Washington Mutual. PGF invests in the preferred stocks of financial companies and with the restricted trading abilities of and ETF (they are tied to some index weighting) I felt the risk outweighed the potential returns. The remaining position of PGF is approximately 3% of the portfolio. After the sale cash is about 14% of the portfolio.

My Income Portfolio is a hypothetical portfolio published on this site for informational purposes only. Trades are calculated at the midpoint of the daily open and close with the $4.95 commission charged by Trade King. The portfolio holds only long stock/ETF/CEF postions and cash.