“Year-to-date, you’re talking a few hundred million dollars into the funds. Even last year, they saw positive net inflows,” McRedmond says.

Year-to-date, PGF has seen $276 million in net inflows.

Part of the rush of inflows was because of last year’s suspension of financial stock short-sales. “All of a sudden, you had institutional investors and hedge funds looking for ways to trade financial markets.”

Preferred stock can be more appealing to investors who want financials exposure, but are wary of how beaten-down the sector has become.

“People might not have been comfortable buying the common stock, but they wanted to have a way to gain exposure to the sector for any recovery, while earning a dividend,” McRedmond says, noting that many financials have eliminated or reduced dividends on their common stock.

Another reason the preferred financial stock might have gotten a boost is because big-name investing gurus such as Pimco’s Bill Gross highlighted the fact that investors should go where the government goes.

“It sparked a great deal of interest when Bill Gross said he was buying bank preferred stocks.”

  • PowerShares Financial Preferred (PGF): down 9.5% year-to-date