Preferred Stock ETFs Remain Popular, Despite Lower Yields (PFF)

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June 12, 2017 11:08am NYSE:PFF

NYSE:PFF | News, Ratings, and Charts

Recently we discussed the steep drop in interest rates (amid rising bond prices) that has occurred since mid-May, and this brings some of our focus to the “Preferred Stock” space which is relevant in this conversation.


Since preferred stocks pay a fixed dividend like a bond but represent ownership (equity) in a company like a common stock, ETFs in this space have gained favor from those investors and portfolio managers whom are looking for yield. The largest “Preferred Stock” ETF in the U.S. listed landscape is PFF (iShares U.S. Preferred Stock, Expense Ratio 0.47%, $17.9 billion in AUM), and the fall in rates in the marketplace has not hindered the fund’s asset gathering assets, as it has attracted more than $689 million year-to-date.

As we have discussed in this piece in the past, PFF is more than three times larger than the second biggest fund in the space, PGX (PowerShares Preferred Portfolio, Expense Ratio 0.50%, $5 billion in AUM). PGX has seen decent inflows year-to-date as well, to the tune of about $560 million in, even though rates have slid recently, pushing yields in PFF and PGX for instance closer and closer to 52-week lows (5.63% for both funds presently).

Three other $1 billion-plus funds in the “Preferred” space are FPE (First Trust Preferred Securities and Income, Expense Ratio 0.85%, $2.1 billion in AUM), PGF (PowerShares Financial Preferred Portfolio, Expense Ratio 0.63%, $1.6 billion in AUM), and VRP (PowerShares Variable Rate Preferred Portfolio, Expense Ratio 0.50%, $1.5 billion in AUM).

PFF includes two hundred ninety two individual preferred names presently and top issuers are as follows: 1) WFC, 2) AGN, 3) HSBC Holdings PLC, 4) Barclays Bank PLC, 5) ALLY.

PFF-2017-06-12

The iShares S&P US Preferred Stock Index Fund ETF (NYSE:PFF) was trading at $38.80 per share on Monday morning, up $0.01 (+0.03%). Year-to-date, PFF has gained 4.27%, versus a 8.72% rise in the benchmark S&P 500 index during the same period.

PFF currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 15 ETFs in the Convertible Bond/Preferred Stock ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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