Core Insights - Preferred securities provide higher income potential than bonds and lower volatility than equities, making them a unique investment option for income-oriented investors [1] - Understanding sector exposure is crucial as different sectors like financials, REITs, utilities, and industrials respond variably to rate and credit cycles [1] Understanding Preferred Securities - Preferred securities are hybrid instruments that combine features of fixed income and equity, typically offering higher yields than investment-grade bonds while ranking senior to common equity but junior to bonds [1] - Most preferreds are perpetual securities with callable features, making income the primary driver of returns [1] Who Should Invest in Preferred Securities? - Preferred securities are suitable for investors seeking enhanced income with lower volatility than equities but who are willing to accept more risk than traditional investment-grade bonds [1] - They are often utilized by income-oriented investors looking to diversify fixed income allocations and enhance yield [1] Preferred Securities by Sector - **Financials Preferreds**: Represent the largest segment of the preferred market, sensitive to credit conditions and interest rate changes, with elevated regulatory and credit risks during financial stress [1] - **REITs Preferreds**: Provide income exposure supported by real estate cash flows, with sensitivity to real estate fundamentals and financing costs [1] - **Utilities Preferreds**: Issued by regulated companies with stable revenue profiles, offering more bond-like rate sensitivity and potentially lower yields [1] - **Industrials Preferreds**: Less common but can provide diversification benefits, with wide variation in credit quality and structure [1] Understanding Bonds - Bonds are fixed income securities representing debt obligations, providing contractual interest payments and priority over preferred and common shareholders in liquidation [1] - Investment-grade bonds generally offer lower yields than preferred securities but provide greater capital structure protection [1] Who Should Invest in Bonds? - Bonds are suited for investors prioritizing capital preservation, income stability, and lower credit risk, often serving as the foundation of diversified portfolios [1] Understanding Equities - Equities represent ownership in a company, with common shareholders participating in earnings growth but ranking lowest in the capital structure during liquidation [1] - Equity returns are driven by company fundamentals and market sentiment, exhibiting higher volatility than bonds or preferred securities [1] Who Should Invest in Equities? - Equities are appropriate for long-term investors seeking capital appreciation and willing to tolerate higher short-term volatility [1] Key Features Comparison - Preferred securities offer higher income and moderate volatility compared to bonds and equities, which have lower income and higher volatility respectively [1] When to Invest in Each Asset Class - Equities are suitable for long-term growth, bonds for capital preservation, and preferreds for income generation with lower volatility [1] How to Invest in Preferred Securities - Investors seeking diversified preferred exposure beyond financials may consider the VanEck Preferred Securities ex Financials ETF (PFXF), which focuses on REITs, utilities, and industrial issuers [1][2]

Core Viewpoint - Invesco's SmallCap High Dividend ETF (XSHD) has cut its distributions by 28% by mid-2025, with payouts down 40% from 2023 levels, raising concerns about the sustainability of its income stream due to its heavy concentration in mortgage REITs and interest rate sensitivity [1]. Group 1: Dividend Performance - XSHD's monthly distributions averaged $0.086 in early 2025 before dropping approximately 28% by mid-year, indicating stress among the ETF's underlying holdings [1]. - The most recent distribution in January 2026 was $0.06249, reflecting a sustained annualized payout decline of about 40% from 2023 levels [1]. Group 2: Fund Structure and Holdings - XSHD tracks small-cap U.S. stocks selected for high dividend yields and low volatility, with $74.4 million in net assets [1]. - The fund is heavily concentrated in real estate investment trusts (REITs), with financials representing 21.1% of holdings, making its income dependent on interest rate spreads and property cash flows [1]. Group 3: Market Performance - XSHD has experienced a total return decline of 14.06% over five years, significantly underperforming the broader small-cap market, which saw a gain of 17.23% during the same period [1]. - Even with dividends reinvested, XSHD investors faced negative real returns while taking on concentration risk in volatile mortgage REITs [1].

Financial Data and Key Metrics Changes - In Q4 2025, adjusted net investment income (NII) per share was $0.36, consistent with the previous quarter, resulting in a return on equity (ROE) of 9.7% [11][22] - Net asset value (NAV) per share decreased to $14.81 from $14.89, primarily due to write-downs on a few watchlist names, partially offset by share repurchases [11][24] - The company repurchased $148 million of stock, the largest repurchase in its history, which was accretive to NAV per share by approximately $0.05 [10][24] Business Line Data and Key Metrics Changes - OBDC had fundings of $820 million against $1.4 billion of repayments, resulting in lower net leverage at 1.19 times [14][15] - The portfolio is broadly diversified across 30 industries, with average position sizes of approximately 40 basis points [16] - Revenue and EBITDA growth for borrowers in the software sector was 10% and 16% respectively in Q4, outpacing other sectors [17] Market Data and Key Metrics Changes - The company executed asset sales totaling $1.4 billion, including $400 million from OBDC, at book value and an average price of 99.7, which is a strong endorsement of its valuation process [8][9] - Interest coverage ratios remained healthy at approximately 2 times, with a non-accrual rate decreasing to 1.1% at fair value [18][19] Company Strategy and Development Direction - The company terminated the proposed merger with OBDC II and opted for a significant asset sale to provide liquidity to shareholders [6][7] - The focus remains on disciplined capital allocation, with a strategy of buy and hold lending, while also being opportunistic in asset sales [10][9] - The company aims to maintain a strong credit profile and has received a Moody's upgrade to Baa2, reflecting its solid portfolio and liability management [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's credit quality, stating that losses remain low and borrower fundamentals are strong [27][29] - The company anticipates that lower base rates and tighter spreads will impact future earnings, but does not expect broad-based credit issues [27][29] - Management highlighted the importance of maintaining a stable dividend while evaluating the impact of the current rate environment on earnings [29][90] Other Important Information - The board declared a first-quarter base dividend of $0.37, to be paid on April 15, 2026 [23] - The company has authorized a new share repurchase program of up to $300 million, replacing the previous $200 million plan [24] Q&A Session Summary Question: Is OBDC II halting redemptions permanently? - Management clarified that they are not halting redemptions but are accelerating them, returning 30% of capital at book value to investors [34][35] Question: What is the most accretive use of capital today? - Management indicated that they are evaluating both stock buybacks and capital deployment into the market, given the stock price is trading below book value [40][42] Question: What is the appetite for new software loan purchases? - Management expressed confidence in their ability to differentiate between resilient and vulnerable software businesses, indicating a cautious approach to new investments in the sector [68][70] Question: What was the weighted average spread of the assets sold? - The weighted average spread of the sold portfolio was just over 500 basis points, consistent with the broader portfolio [75] Question: How does the mark received compare with previous fair value marks? - Management stated that the assets were sold at their marks, which have been valued close to par, validating their valuation process [87][88]

Core Viewpoint - The Vanguard Real Estate ETF (VNQ) is attracting retirees seeking quarterly income, while growth investors are moving away due to its underperformance compared to broader equity markets, primarily driven by interest rate sensitivity [1]. Group 1: VNQ Performance and Characteristics - VNQ has returned 88.13% over the past decade, significantly lower than the SPDR S&P 500 ETF Trust (SPY), which returned 255.65% during the same period [1]. - The ETF yields 3.82% and has 54% of its assets concentrated in its top 10 holdings, which include Prologis, American Tower, and Equinix [1]. - VNQ provides diversified real estate exposure without the management burden of direct property ownership, tracking the MSCI US Investable Market Real Estate 25/50 Index with net assets of $65.7 billion [1]. Group 2: Market Conditions and Risks - VNQ's performance has been impacted by rising interest rates, with the 10-year Treasury yield decreasing from 4.55% to 4.04% over the past year, yet it still lags behind equities [1]. - Housing starts have declined by 16.4% year-over-year, indicating softer construction demand that affects certain REIT categories [1]. - The ETF sacrifices growth potential for income, making it more suitable as a portfolio diversifier rather than a growth engine [1].

Core Viewpoint - The Schwab Long-Term U.S. Treasury ETF (SCHQ) offers a lower expense ratio and gentler drawdowns compared to the iShares 20 Year Treasury Bond ETF (TLT), making it an attractive option for fixed income investors seeking long-dated U.S. government debt exposure [1][4]. Cost Comparison - SCHQ has an expense ratio of 0.03%, significantly lower than TLT's 0.15% [3][4]. - SCHQ provides a slightly higher dividend yield of 4.6% compared to TLT's 4.4% [3]. - The assets under management (AUM) for TLT is $45.2 billion, while SCHQ has $902.5 million [3]. Performance & Risk Analysis - Over the past five years, SCHQ has a max drawdown of -40.88%, which is less severe than TLT's -43.70% [5]. - A $1,000 investment in SCHQ would have grown to $599, compared to $573 for TLT over the same period [5]. - SCHQ exhibits lower volatility with a beta of 0.52, while TLT has a beta of 2.34, indicating greater price volatility relative to the S&P 500 [3]. Portfolio Composition - SCHQ tracks the long-term U.S. Treasury bond market with a portfolio of 98 holdings, providing more diversification than TLT, which holds only 45 positions [6][7]. - Both funds exclusively invest in U.S. Treasury bonds, avoiding corporate or non-Treasury exposure, but TLT's concentration in fewer holdings may increase risk [7]. Market Outlook - Following two Federal Reserve rate cuts in Q4 2026, interest rates may continue to decline, potentially increasing demand for bonds as investors seek to lock in higher yields [9]. - While SCHQ is currently viewed as the better option due to its performance and lower volatility, TLT could outperform if interest rates decline further [10].

8 Q4 2025 Earnings Supplemental Materials January 30, 2025 1 Disclaimers Forward-Looking Information This presentation contains forward-looking statements and information. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," " ...

4th Quarter 2025 Update Kansas City, MO January 27, 2026 Presentation Index | Corporate Overview & Investment Thesis | 3 | | --- | --- | | Purchase Accounting Update | 8 | | 4th Quarter 2025 Results | 11 | | Line of Business Updates | 29 | | Long-Term Performance Trends | 40 | | Appendix | 48 | | Board of Directors | | | Statements Forward-Looking Non-GAAP Reconciliations | | | Select Financial Statements Peer Group | | Please refer to the Forward-Looking Statements on slide 50 for important disclosures abo ...

Core Viewpoint - The Janus Henderson Mortgage-Backed Securities ETF (JMBS) offers a 5.04% yield, presenting a strong alternative to traditional bond funds for retirees seeking monthly income [1] Income Generation - JMBS generates income from homeowners' monthly mortgage payments, distributing these as monthly dividends to shareholders, ensuring predictable cash flow for retirees [2] - The fund has maintained an unbroken payment history since its inception in 2018, reflecting its reliability [2] Dividend Sustainability - JMBS has shown remarkable dividend resilience across varying interest rate environments, with recent monthly distributions around $0.20 per share [3] - The fund's management team possesses deep expertise in the mortgage market, contributing to its effective portfolio strategy and security selection [3] Dividend Safety - The underlying securities of JMBS are predominantly agency-backed, which means the U.S. government guarantees principal and interest payments, significantly reducing credit risk [4] - The current interest rate environment supports robust income generation, with low prepayment risk due to elevated mortgage rates, leading to stable cash flows [4] Expense Ratio and Yield - JMBS has a 0.22% expense ratio, which is higher than passive alternatives but justified by its 5.04% yield, providing additional income for retirees [5] - This yield advantage helps cover living expenses without depleting principal, making the active management premium worthwhile for cash flow-focused investors [5] Total Return Performance - JMBS has delivered strong total returns, combining price appreciation with distribution payments, and has outperformed the broad bond market over a five-year period [6] Alternative Options - Investors may consider the Vanguard Mortgage-Backed Securities ETF (VMBS), which has a lower expense ratio of 0.03% and a yield of 3.96%, offering a cost-effective alternative for retirees prioritizing expenses over yield [8]

SEB Q4 2025 Pre-Close Call Summary Company Overview - **Company**: SEB (OTCPK:SVKE.F) - **Date of Call**: December 17, 2025 - **Speaker**: Paul Wyszyski, Head of Investor Relations Key Points Macro Environment - Average three-month STIBOR is lower in Q4 compared to Q3, with the Swedish central bank lowering the policy rate by 25 basis points effective October 1st [1] - SEB adjusted some lending and deposit rates in Sweden following the rate cuts [1] - The European Central Bank kept the deposit facility rate unchanged, affecting Baltic operations primarily on the deposit side [2] Interest Rate Sensitivity - SEB's equity is approximately SEK 220 billion, with private and corporate transaction accounts and savings accounts totaling around SEK 370 billion, and Baltic transaction accounts around SEK 200 billion, leading to a total of roughly SEK 800 billion sensitive to rate changes [2] - Net interest income (NII) is expected to bottom out three to six months after the last rate cut, influenced by balance sheet dynamics [3] Profit and Loss Overview - The P&L and balance sheet are impacted by FX movements; a stronger SEK results in lower income and costs, while a weaker SEK has the opposite effect [4] - The SEK strengthened marginally against the euro compared to Q3, resulting in a smaller headwind on the P&L [4] - NII increased slightly despite downward trending interest rates due to higher day count, positive FX effects, lower deposit insurance fees, and reduced short-term funding costs [6] Division Performance - Business and retail banking NII declined by around SEK 100 million compared to the previous quarter due to lower interest rates on deposit margins [6] - Baltic division's NII remained largely unchanged as lower rates were offset by higher lending and deposit volumes [6] - Treasury NII benefited from favorable yield curve and funding conditions [7] Net Fee and Commission Income - A significant portion of net fee and commission income is linked to assets under management, which correlates with stock market performance [7] - Advisory and securities-related fees were seasonally softer in Q3, with no larger transactions reported in Q4 [8] Expenses and Credit Losses - Total expenses target for 2025 is SEK 33 billion, with potential for acceleration in cost implementation programs [9] - Net expected credit losses reported at three basis points, with an additional SEK 100 million in portfolio overlays [10] Capital and Risk Exposure - Current share buyback program amounts to SEK 2.5 billion, expected to conclude by January 27, 2026 [10] - CET1 capital ratio is affected by share buybacks, with a dividend payout ratio target of around 50% [11] - Remaining impact from the risk exposure amount (REA) increase in the Baltics is around 70 basis points, expected to phase in over the next three quarters [12] Additional Notes - The call concluded with a reminder of the silent period starting January 1, with the Q4 2025 interim report scheduled for publication on January 29, 2026 [13] Conclusion - SEB is navigating a challenging macro environment with interest rate adjustments and FX movements impacting its financial performance. The bank is focused on managing its capital effectively while preparing for upcoming financial disclosures.

Core Insights - The JPMorgan Equity Premium Income ETF (JEPI) is popular for its substantial yield, while the Invesco KBW High Dividend Yield Financial ETF (KBWD) offers an even higher yield by focusing on financial sector dividend payers [1][2] - Investors should analyze KBWD's concentrated holdings and expense structure before investing [1] Group 1: Fund Characteristics - KBWD generates income through dividend distributions from its holdings, unlike JEPI, which uses options strategies [2] - The fund has a concentrated focus on financial sector equities, particularly mortgage REITs and business development companies, which presents both opportunities and risks [2][8] Group 2: Top Holdings and Performance - ARMOUR Residential REIT (ARR) declared a $0.24 monthly dividend, with a book value of $19.02 per share, reporting $194.5 million in revenue and $159.3 million in net income for Q3 2025 [3] - AGNC Investment Corp (AGNC) announced a $0.36 quarterly dividend, yielding 13.70% annually, with a $90.8 billion agency MBS portfolio and $903 million in revenue for Q3 [4] - Annaly Capital Management (NLY) paid a $0.70 per share dividend, managing a $97.8 billion portfolio and reporting $1.79 billion in revenue for Q3 [5] Group 3: Risk Factors - Mortgage REITs operate with significant leverage, making them sensitive to interest rate movements and yield curve dynamics [6] - KBWD's concentration in financial sector holdings exposes investors to interest rate sensitivity and leverage risks [8][11] Group 4: Alternative Options - The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) offers a diversified alternative by employing a covered call strategy on Nasdaq-100 stocks, generating income through option premiums [12]