Global X Funds Debuts Ultra Cheap Preferred Stock ETF (PFFD)

Share This Article
September 15, 2017 6:14am NYSE:SDIV

ETF issuer Global X Funds this week announced a new preferred stock ETF that is sure to become popular among investors looking to capture relatively high yields in their portfolios.


The Global X U.S. Preferred ETF (PFFD) is likely to gather significant assets due to its low fees. According to the SEC filing, PFFD will have an expense ratio of just 0.23%, making it the lowest-cost preferred stock ETF in the U.S. investment landscape.

The fund will track the BofA Merrill Lynch Diversified Core U.S. Preferred Securities Index, and list on the BATS exchange. The tracking index invests in a wide variety of U.S.-listed preferred shares, which includes floating-rate, variable-rate, and fixed-rate preferred securities, along with cumulative and noncumulative preferred securities, as well as trust preferred securities, according to the prospectus.

To meet eligibility requirements, securities must meet certain minimum price, liquidity, and maturity thresholds. They also must have at least $100 million outstanding.

Components within the portfolio are weighted by their amount outstanding, pricing, and accrued interest. This is very similar to a traditional market cap weighting that you’d see in a typical equity index, such as the S&P 500. Individual issuers are capped at a maximum of 10% of the index at each rebalancing, which occurs quarterly.

Getting back to PFFD’s low fees, its 0.23% expense ratio is less than half of that of the biggest ETF in the space, the $18.5 billion iShares U.S. Preferred Stock ETF (PFF) (0.47%), and much lower than the second largest fund, the PowerShares Preferred Portfolio (PGX) (0.50%).

Global X’s current largest fund, the $966 million The Global X Superdividend ETF (NYSE:SDIV), was unchanged in premarket trading Friday. Year-to-date, SDIV has gained 9.38%, versus a 12.92% rise in the benchmark S&P 500 index during the same period.

SDIV currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #7 of 68 ETFs in the Global Equities ETFs category.


9 "Must Own" Growth Stocks For 2019

Read Next



Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular



Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories