Preference Shares are ideal for investors seeking a reliable dividend stream and a lower-risk investment compared to ordinary shares.

Each potential Investor in any Preference Share Programme must determine the suitability of the investment in light of their own circumstances. In particular, each potential Investor should:

  1. have sufficient knowledge and experience to make a meaningful evaluation of the Preference Shares, the merits and risks of investing in the Preference Shares and the information contained in the Prospectus;

  2. have access to, and knowledge of, appropriate tools to evaluate, in the context of his/her particular financial situation, an investment in the Preference Shares and the impact such an investment will have on his/her overall investment portfolio;

  3. have sufficient financial resources and liquidity to bear all of the risks of an investment in the Preference Shares;

  4. understand thoroughly the terms of the Preference Shares and be familiar with the behaviour of any relevant financial markets; and

  5. be able to evaluate (either alone or with the help of a financial advisor) possible scenarios for economic, interest rate and other factors that may affect his/her investment and his/her ability to bear the applicable risks.

Investing in fixed income instruments is an excellent way to diversify a portfolio. Preference Shares not only offer attractive yields and diversification benefits, but they are also subject to a different tax regime (generally lower) than traditional fixed-income instruments and provide more certainty of cash flows than ordinary shares.

Positive attributes of Preference Shares:

  • Preference Share dividends are taxed at a lower rate compared to interest income from bonds.

  • Preference Shares offer low correlation with other asset classes, making them a valuable tool for diversifying and spreading portfolio risk.

  • Recent regulatory changes have reduced the supply of Preference Shares, increasing demand and supporting prices.

  • The main returns from Preference Shares come from dividends, not capital gains.

Negative attributes of Preference Shares:

  • Dividends from floating rate Preference Shares adjust with interest rates, meaning that if interest rates decline, the dividend payments also decrease. For fixed rate Preference Shares, increasing interest rates do not result in higher dividend amounts.

  • The capital value of Preference Shares is mainly influenced by the company's creditworthiness. If the company's creditworthiness declines, it negatively impacts the value of the Preference Shares.

  • Preference Shares do not benefit from increases in the company's earnings or stock price. While they offer stable dividends similar to debt instruments, their capital value does not rise with the company‚Äôs financial performance.