John Hancock Advisers, which manages $25.6 billion in assets, launched its eighth closed-end fund that invests in preferred securities, and its twelfth closed-end fund overall.
The Boston-based investment manager said John Hancock Preferred Income Fund III will provide a high current income consistent with the preservation of capital by investing at least 80% of its assets in preferred stocks and other securities including convertibles.
"The primary appeal of John Hancock Preferred Income Fund III is its ability to provide a competitive yield compared with corporate bonds, government bonds and real estate investment trusts," said Maureen Ford, chairman, president and chief executive of John Hancock Advisers, in a prepared statement.
During its three-week offering period ended June 19, the fund issued roughly $675 million of its shares. That amount could potentially increase another $100 million assuming full exercise of the underwriters over-allotment option, the company said. UBS acted as lead underwriter with Merrill Lynch serving as co-underwriter.
The company said it plans to issue one-third of the funds capital in preferred shares so that total assets, including underwriter commitments, may exceed $1 billion.
In terms of asset allocation, John Hancock Preferred Income Fund III will invest 25% of its assets in the utilities sector. The financial services sector will also play a prominent role in the funds portfolio.
The fund is allowed to invest up to 20% of its assets in securities rated below investment grade but will maintain an average rating of at least investment grade. The fund will also employ certain hedging strategies using options and futures in order to protect the portfolio against fluctuating interest rates.
The fund, which began trading on the New York Stock Exchange on June 17 under the symbol HPS, is run by the same management team as its five Patriot Funds along with the John Hancock Preferred Income Fund and John Hancock Preferred Income Fund II, both introduced last year.
John Hancock Advisers managed more than $2.7 billion in preferred-stock assets as of March 31, 2003.