Today, Advisors Asset Management (AAM) launched an ETF that will track investment results based on listings with shorter durations and domestic preferred stocks.
The AAM Low Duration Preferred & Income Securities ETF (NYSEArca: PFLD) seeks to track the investment results of an index composed of shorter duration exchange-listed U.S. dollar-denominated hybrid debt and preferred stock publicly issued by corporations in the U.S. domestic market.
PFLD will ideally provide high monthly income by targeting preferred securities that have historically offered higher yields than similarly rated bonds, allowing for a solution to diversify income streams. Preferred securities may also pay qualified dividends, which are taxed at a lower rate than ordinary income.
The fund will also reduce interest rate risk. PFLD targets preferred securities with an option-adjusted duration of fewer than five years to reduce the overall interest rate risk.
Additionally, with PFLD, investors can diversify their portfolios. Hybrid securities have exhibited lower correlations to traditional stock and bond strategies, offering a way to diversify investments and potentially mitigate volatility.
To say more about the index, PFLD will track the total return performance, before fees and expenses, of the ICE 0-5 Year Duration Exchange-Listed Preferred & Hybrid Securities Index (PHLD) . The starting universe is the ICE Exchange Listed Preferred & Hybrid Securities Index (PHGY), excluding convertible securities.
The index will Remove securities with an option-adjusted duration greater than five. It will also remove securities priced greater than 105% of face value. Moreover, market-capitalization is weighted and subject to liquidity and diversification requirements. And the index rebalances monthly.
Established in 1979, AAM has become a highly respected financial force providing complete portfolio solutions tailored to the individual needs of financial professionals and their clients. Its results-oriented advisor-centric service model and industry experience differentiate us from the competition by adding real value to your financial services business.