The largest ETF focused on “Preferred Stocks”, PFF (iShares S&P U.S. Preferred Stock, Expense Ratio 0.48%), has stabilized this week from the June carnage that it experienced in terms of a steep downdraft and institutional selling amid the all too familiar rising rate fears in the marketplace.
PFF has an impressive $10.7 billion in assets under management, with the next closest competitor in the space, PGX (PowerShares Preferred Portfolio, Expense Ratio 0.50%) amassing $2.3 billion in AUM.
PFF still has eked out net inflows in 2013 (+$177 million) although it has taken a bit of drubbing along with the space in the past couple months (-$1.09 billion in net outflows since June 1st).
Nine ETFs are currently categorized in this space, and investors can hone in on specialized exposure to preferred names now, outside of U.S. listings as well via products like IPFF (iShares International Preferred Stock, Expense Ratio 0.55%) and CNPF (Global X Canada Preferred, Expense Ratio 0.58%) for example, and traditionally investors have looked to this space to provide competitive yields in portfolios.
PFF for instance boasts a 5.85% yield currently, and other top funds in terms of asset sizes in the space have yields as follows: PGX 6.51%, PGF (PowerShares Financial Preferred Portfolio, Expense Ratio 0.60%, 6.42%), PSK (SPDR Wells Fargo Preferred Stock, Expense Ratio 0.45%, 6.52%), and IPFF (4.02%).
In terms of portfolio composition, none of these products are created identically and may have varying exposures to different equity sectors if not international exposure in some cases as well.
Care should be taken in examining the underlying portfolios and fund objectives when evaluating the Preferred Stock ETF space and while yield should remain a metric, it should not be the only deciding factor when determining investment allocations from the current menu of options.
Other ETFs that are newer to the Preferred landscape include PFXF (Market Vectors Preferred Securities ex-Financials 0.40%), FPE (First Trust Preferred Securities and Income, Expense Ratio 0.85%), and SPFF (GlobalX SuperIncome Preferred, Expense Ratio 0.58%).
iShares S&P U.S. Preferred Stock
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
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