Additionally, PFF had an average beta, or the measure of the investment’s volatility compared to its benchmark, of 0.36, whereas PGX had a three-year beta of 0.23, which is 36% less volatile than PFF, according to the report.
Other ETFs in this category include PowerShares Financial Preferred Portfolio (NYSEArca: PGF), SPDR Wells Fargo Preferred Stock ETF (NYSEArca: PSK), iShares S&P International Preferred Stock Index (NYSEArca: IPFF), Market Vectors Preferred Securities ex Financials ETF (NYSEArca: PFXF), Global X Canada Preferred ETF (NYSEArca: CNPF) and Global X SuperIncome Preferred ETF (NYSEArca: SPFF).
Although preferred ETFs are offering decent yields and have performed well in 2012, investors need to be aware of some risks. Most importantly, many of the funds are concentrated in the financial sector and European banks, so another credit flareup could be a problem. Rising interest rates are another potential risk.
For more information on preferred funds, visit our preferred stock category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own PGF.