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Principal Global Investors offers specialized expertise in the management of preferred securities portfolios through our affiliate, Spectrum Asset Management. With $7.9 billion in assets under management,* as of September 30, 2008, Spectrum is the largest manager of preferred securities portfolios in the United States. The firm was founded in 1987 and is based in Stamford, Conn. Spectrum's clients include insurance companies, corporations, retirement plans, charitable trusts and financial institutions in the United States and abroad. Spectrum's investment capabilities emphasize hybrid preferred securities, generally one of the highest yielding investment grade securities in the U.S. capital markets. Preferred securities also offer diversification and relatively low volatility compared to traditional fixed income and equity alternatives. Spectrum's capabilities encompass all aspects of the preferred market, including portfolio management, trading, hedging and risk management. Spectrum offers intermediateand short duration investment programs for both taxable and tax-exempt clients, which use an allocation of $25 par preferreds, $1,000 par capital securities, and dividends received deduction issues to best achieve a client's objectives. When consistent with client guidelines, portfolios may be hedged to manage interest rate risk to a targeted duration. The strength of our products and performance can be attributed to our rigorous credit approach. We place primary emphasis on investment grade preferreds offering superior risk-adjusted yield premiums. Macroeconomic analysis is conducted to identify those economic sectors that are the most attractive. Our proprietary research is supplemented by direct access to rating agency services, industry analysts at major investment banks and the extensive research resources of Principal Global Investors. Another source of value can be attributed to the exploitation of trading inefficiencies inherent in the preferred market. Our strong market presence enables us to negotiate security prices and take advantage of relative value opportunities due to market inefficiencies and information gaps. Principal Global Investors is a diversified asset management organization and a member of the Principal Financial Group®. We manage $228.0 billion* in assets for clients worldwide. Our investment capabilities encompass an extensive range of equity, fixed income and real estate investments as well as specialized overlay and advisory services.
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