January 31, 2008 at 12:00 pm by Tom Lydon
PowerShares has launched the newest exchange traded fund (ETF) of preferred stocks today.
The PowerShares Preferred Portfolio (PGX) is based on the Merrill Lynch Fixed Rate Preferred Securities Index and gives investors exposure to fixed-income securities.
Preferred stock ETFs have been performing nicely so far this year. Owners of preferred stocks have a higher claim on assets and earnings than common stock. They often have dividends that are paid out to their holders before dividends are paid out to the holders of common stock.
Other ETFs made up of preferred stocks are:
- iShares S&P U.S. Preferred Stock (PFF), up 9.4% year-to-date. Among its top holdings are Ford (F) at 9.1%, Freeport-McMoRan Copper & Gold Inc. (FCX) at 9% and Citigroup (C) at 4.7%.
- PowerShares Financial Preferred (PGF), up 16.3% year-to-date. Among its top holdings are Aegon at 5.7%, Royal Bank of Scotland at a total of 16.1% and Goldman Sachs (GS) at 5.1%.
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