In the event an issuer goes bankrupt, an investor would lose his or her original investment. However, with ETFs, investors would invest in a basket of preferred stocks and minimize any potential risks found in any single company. It should be noted that most preferred stocks are issued by financial institutions, and there are some lingering financial concerns, especially in the Eurozone.
The largest ETFs in the category include PowerShares Financial Preferred (NYSEArca: PGF), PowerShares Preferred (NYSEArca: PGX), SPDR Wells Fargo Preferred Stock (NYSEArca: PSK) and iShares S&P U.S. Preferred Stock (NYSEArca: PFF).
For more information on preferred stocks, visit our preferred stock category.
PowerShares Financial Preferred
Max Chen contributed to this article.