“Today, duration in the $25 par sector is more than nine years. That's the highest it's been in the nearly 15-year history of the major fixed-rate preferred index. In the five years before 2021, average duration was only about 4.6 years. So the market today has roughly twice the interest rate sensitivity it had before the refinancing surge of 2020-2021.”

…the bottom line for the $25 par market is this: you've had greater volatility, you've had meaningful underperformance, and you're now being paid more than 7% yields while you wait for a potential rebound. And Dan, I think that combination, in our view, creates a potentially attractive opportunity.

Very helpful overview at the start as to the rationale behind CIO's upgrade of preferred securities to attractive. Frank, what is it about the retail $25 par preferred sector that makes it more volatile?

So, Frank, that makes sense as you broke it down there for a slow coupon, fixed-rate preferreds have more rate sensitivity. Though, Frank, haven't we seen instances, specifically in October, where the $25 par preferreds have declined even when rates are falling?

Excellent point. I get this question a lot, and it is true. But it comes down to market-demanded yield and compensation for risk. So, let's break it down this way: if higher rates on treasuries push yields higher in credit markets, then prices have to come down in those credit markets. Conversely…

To summarize, you've conveyed that the sector's greater volatility combined with its recent spout of underperformance may provide a setup for a sector rebound. To underscore the opportunities set here, Frank, what are the other parts of the investment case for the $25 per preferred sector? Well,