Recent exchange traded fund launches have focused in on the theme of yield. New ETFs from providers Van Eck and Global X play on investor interest in yield with preferred shares, each with characteristics that can help build a custom portfolio.
The Global X SuperIncome Preferred ETF (NYSEArca: SPFF) follows some of the highest yielding preferred stocks from both the U.S. and Canada. The top 5 holdings are from the financial sector, with Credit Suisse and American International leading the charge. The fund charges 0.58%.[Global X Adds New U.S. Preferred Stock ETF]
“Preferreds have no voting rights, are senior in the capital structure to common stock, and have priority over common stock in the payment of dividends,” says Morningstar analyst Timothy Strauts.
The Market Vectors Preferred Securities ex-Financials ETF (NYSEArca: PFXF) started trading last Tuesday. The expense ratio is set at 0.40%. The ETF actually omits the financial sector completely. This feature may be attractive for many investors since the sector has been volatile for some time.