As advisors seek tax-efficient income solutions amid shifting rate environments, the Principal Spectrum Tax-Advantaged Dividend Active ETF (PQDI) emerges as a compelling option. This actively managed fund focuses on qualified dividend income across preferred securities, institutional bonds, and European contingent convertibles, potentially offering investors half the tax burden of traditional bond income while maintaining investment-grade credit quality and accessing complex securities typically reserved for institutions.
While most fixed-income strategies face declining yields as rates fall, the Principal Spectrum PREF ETF demonstrates how preferred securities with reset features can deliver rising income. Growing from $25 million to $1.2 billion, the strategy’s exclusive focus on institutional preferreds with floating or fixed-to-reset coupons has increased its average coupon from 4.9% to 5.5%. With 60% of holdings facing resets by 2027, this active strategy offers advisors a rare solution for potential income growth regardless of rate direction.
