While preferred stocks provide investors with an attractive source of yields, potential investors should keep in mind that the assets are vulnerable in a rising interest rate environment. If rates rise, the holdings must decline in price to elevate their yield to attractive levels. Furthermore, most preferred stocks are either perpetual or long-dated, which exposes investors to significant interest-rate risk.
Elkhorn’s other ETFs include the Elkhorn FTSE RAFI U.S. Equity Income ETF (BATS: ELKU), which follows the performance of high yield U.S. stocks that have been screened for fundamental factors to target sustainable income. The underlying index screens for financial health based on the return on assets, cash flow to short-term debt plus interest expenses and net operating asset scaled by total assets.
The Elkhorn S&P 500 Capital Expenditures Portfolio (NasdaqGM: CAPX) targets those companies that are diligently reinvesting in their businesses to increase market share and competitive moat. Specifically, CAPX takes the top 100 S&P 500 companies based on efficient capital expenditure as a way to track U.S. firms that have reinvested their money toward meaningful growth and innovation. The ETF was launched at the end of May.
For more news on New ETFs, visit our New ETF category.