With market conditions changing rapidly, investors can’t rely on traditional fixed income alone. Alternative high-yield assets, like private credit and preferreds, could help a portfolio meet the moment and generate yield while mitigating risk.
In the upcoming webcast, Virtus and VettaFi: A Primer on Private Credit and Preferreds, Marc Loughlin, director of CEF & ETF Trading Solutions at WallachBeth Capital; Jay Hatfield, CEO of Infrastructure Capital Advisors; and James Jessup, product manager at Virtus Investment Partners, will highlight the benefits of private credit and preferreds.
For example, the Virtus Private Credit Strategy ETF (VPC) follows the Indxx Private Credit Index, which provides exposure to private credit-focused assets such as business development companies (BDCs) and closed-end funds.
VPC offers passive exposure to the private credit market of a growing financing market for small- and mid-sized businesses in the United States. The fund can provide an attractive and complementary income opportunity for yield hunters. The ETF comes with quarterly distributions via a portfolio of exchange-traded BDCs and CEFs with significant exposure to private credit instruments such as collateralized loan obligations (CLOs), mezzanine loans, and bank loans.
The actively managed Virtus InfraCap U.S. Preferred Stock ETF (NYSEArca: PFFA) invests in a portfolio of over 100 preferred securities issued by U.S. companies with market capitalizations of more than $100 million, with a focus on income. The fund may provide the potential for attractive yields and generate compelling total return results.
Preferred stocks are a class of equity security that typically pay fixed or floating dividends to investors and have “preference” over common stocks, but they are subordinated to bonds. The issuing company must pay dividends to preferred stockholders before common stockholders, and, in the event of a bankruptcy or liquidation of the company’s assets, must put the claims of the preferred stockholders ahead of the claims of the common stockholders.
Additionally, the InfraCap REIT Preferred ETF (NYSEArca: PFFR) is the only ETF offering a diversified investment in preferred securities issued by Real Estate Investment Trusts (REITs). REIT preferreds tend to offer attractive yield potential, both fixed income and equity characteristics, and low equity beta. Compared to traditional preferreds, these securities are also typically exposed to less leverage with generally more predictable revenue streams than those issued by banks and insurance companies.
Financial advisors who are interested in learning more about private credit and preferreds can register for the Wednesday, October 19 webcast here.