Bullboard - Stock Discussion Forum North American Financial 15 Split Corp T.FFN

Alternate Symbol(s): FNCSF

North American Financial 15 Split Corp. is a mutual fund corporation, which invests in a portfolio of over 15 financial services companies. It offers two types of shares, such as Preferred Shares and Class A Shares. Its investment objectives with respect to preferred shares are to provide holders of preferred shares with cumulative preferential monthly cash dividends, the amount of which is... see more

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North American Financial 15 Split Corp > Some considerations

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Post by AnEducator on Mar 21, 2024 11:45pm

Some considerations

I have the closing NAVs for FFN and FTN at $15.99 and $18.47 respectively, exactly in line with MM's numbers. So one may wonder why anyone would prefer FFN over FTN when both are trading at a similar discount despite FTN being in a far better position to continue paying for the foreseeable future.

Certainly the greater weighting of U.S. financials in FFN would be a reasonable explanation, as well as the higher yield. But another significant consideration that is rarely mentioned is the greater leverage that FFN provides, currently 2.67 for FFN vs. 2.18 for FTN. The better the financials perform, the greater the gain (and loss) in the NAV of FFN compared to FTN.

One would rightfully expect a correlation between risk and reward, so FFN is great for more aggressive investors looking for capital gains whereas FTN is more suitable for conservative investors who prefer reliability of their dividends.

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