Stock Analysis & Valuation First Trust Intermediate Duration Preferred & Income Fund (FPF)

• Previous Close: $18.93
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	96.78	411
Intrinsic value (DCF)	6.67	-65
Graham-Dodd Method	18.15	-4
Graham Formula	1572.01	8204

Strategic Investment Analysis

Company Overview

First Trust Intermediate Duration Preferred & Income Fund (FPF) is a closed-end fixed-income mutual fund managed by First Trust Advisors L.P. and co-managed by Stonebridge Advisors, LLC. Launched in 2013, FPF primarily invests in fixed-income securities, including below-investment-grade high-yield bonds, to generate income for investors. The fund focuses on intermediate-duration preferred securities, balancing yield and interest rate risk. Operating in the Financial Services sector under Asset Management - Income, FPF provides exposure to a diversified portfolio of income-generating assets, appealing to investors seeking steady cash flows. With a market cap of approximately $1.1 billion, FPF is listed on the New York Stock Exchange (NYSE) and is domiciled in the U.S. The fund's strategy targets a mix of investment-grade and high-yield securities, offering a blend of stability and higher returns, making it a relevant option for income-focused portfolios.

Investment Summary

First Trust Intermediate Duration Preferred & Income Fund (FPF) presents an attractive option for income-seeking investors, given its focus on preferred securities and high-yield bonds. The fund's intermediate-duration strategy mitigates some interest rate risk while providing competitive yields, evidenced by its $1.65 annual dividend per share. With a solid net income of $276.8 million and diluted EPS of $4.55, FPF demonstrates strong income-generating capabilities. However, its exposure to below-investment-grade securities introduces credit risk, which could impact returns during economic downturns. The fund's low beta (0.81) suggests relative stability compared to broader equity markets, but fixed-income investors should remain cautious about rising interest rates, which could pressure bond prices. Overall, FPF is a viable choice for diversified income portfolios, though investors should weigh its yield advantages against potential credit and interest rate risks.

Competitive Analysis

First Trust Intermediate Duration Preferred & Income Fund (FPF) differentiates itself through its specialized focus on intermediate-duration preferred securities and high-yield bonds, offering a balance between yield and interest rate sensitivity. Managed by First Trust Advisors and Stonebridge Advisors, the fund benefits from experienced fixed-income management. Its competitive advantage lies in its ability to tap into below-investment-grade securities for higher yields while maintaining a diversified portfolio to mitigate risk. Compared to peers, FPF's intermediate-duration approach provides a middle ground between short-term funds (lower yield, lower risk) and long-duration funds (higher yield, higher interest rate risk). However, its reliance on high-yield securities exposes it to credit risk, particularly in economic downturns. The fund's lack of leverage (zero total debt) is a strength, reducing financial risk, but its performance remains tied to broader fixed-income market conditions. FPF's niche positioning makes it a compelling option for investors seeking income with moderate duration risk, though it faces stiff competition from larger, more diversified fixed-income funds.

Major Competitors

• iShares Preferred and Income Securities ETF (PFF): PFF is a larger, more liquid ETF offering broad exposure to preferred securities. It provides diversification across investment-grade and high-yield preferred stocks, making it less risky than FPF's high-yield focus. However, PFF's passive management approach may lack the active yield-optimization strategies employed by FPF.
• Invesco Preferred ETF (PGX): PGX focuses on investment-grade preferred securities, offering lower credit risk than FPF but with potentially lower yields. Its passive strategy and lower expense ratio make it cost-effective, though it may underperform FPF in high-yield environments.
• SPDR ICE Preferred Securities ETF (PSK): PSK provides exposure to a mix of investment-grade and high-yield preferred securities, similar to FPF but with a passive management approach. Its broader diversification reduces idiosyncratic risk, but it may lack the active management edge of FPF.
• Nuveen Preferred & Income Securities Fund (JPS): JPS is another closed-end fund focusing on preferred securities, with a similar yield-oriented strategy. It employs leverage, which can enhance returns but also increases risk compared to FPF's unleveraged approach.