Preferred stocks have various factors affecting their future risk. The three major characteristics of these shares are the type of dividends they pay, their payment schedules and their ratings, along with their ability to be converted into the company’s common stock, reports Doug K. Le Du for Seeking Alpha. Together, the aforementioned all affect the amount of risk in a preferred stock fund. However, some investors can use these traits to actually manage risk within their portfolio.
Other preferred stock ETFs:
- PowerShares Preferred Portfolio (NYSEArca: PGX) yields 6.6%
- PowerShares Preferred Financial (NYSEArca: PGF) yields 6.9%
- SPDR Wells Fargo Preferred Stock (NYSEArca: PSK) yields 3.1%
iShares S&P U.S Preferred Stock Index Fund
Tisha Guerrero contributed to this article.