Virtus Debuts Active Preferred Stock ETF

Virtus ETF Solutions has partnered with Infrastructure Capital Advisors to launch a new U.S. preferred stock ETF that may provide yield-hunters a suitable income alternative.

The recently launched Virtus InfraCap U.S. Preferred Stock ETF (NYSEArca: PFFA) has a 1.36% expense ratio.

The actively managed Virtus InfraCap U.S. Preferred Stock ETF tries to generate current income and capital appreciation, according to a prospectus sheet.

Jay D. Hatfield, co-founder and president of Infrastructure Capital Advisors, and Edward F. Ryan, co-founder and chief financial officer, chief compliance officer and chief operating officer of Infrastructure Capital Advisors, serve as the portfolio managers of the fund and will be responsible for the day-to-day management of the fund’s portfolio.

How PFFA Seeks Income

Hatfield said the new ETF will try to seek current income and capital appreciation in a sector that may be less understood by investors. The fund 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 stock are a class of equity security that typically pay fixed or floating dividends to investors and have “preference” over common stock, 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.