ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Beyond Basic Beta Channel
  2. PFXF Is a Preferred ETF with Perks
Beyond Basic Beta Channel
Share

PFXF Is a Preferred ETF with Perks

Tom LydonDec 23, 2022
2022-12-23

Amid expectations that a less aggressive tenor of interest rate increases will arrive in 2023, some market observers are looking at high-yield asset classes that stumbled this year amid seven interest rate increases by the Federal Reserve.

Preferred stocks and exchange traded funds such as the VanEck Preferred Securities ex Financials ETF (PFXF A) are among the high-yield assets that that dealt with plenty of headwinds in 2022. However, that picture could turn brighter in 2023 and PFXF has some sources of allure.

As its name implies, PFXF doesn’t hold preferred stocks issued by banks, which makes for an interesting strategy considering banks are the largest issues of preferred stocks. However, the VanEck ETF does hold some preferreds issued by real estate investment trusts (REITs) and that’s pertinent to income investors because some analysts are bullish on REIT preferreds.

“REIT preferreds invariably are cumulative, a favorable feature. This means that issuers need to make up any missed dividends before paying dividends on their common shares. While preferreds don’t have the same security as debt, issuers are loath to omit preferred dividends. During the financial crisis, most banks continued to pay preferred dividends in full even when common dividends were slashed,” reports Andrew Bary for Barron’s.

Preferreds issued by commercial and residential REITs account for 17.76% of PFXF’s 121 holdings. That’s the ETF’s second-largest industry exposure behind the 28.87% devoted to utilities preferreds. Public Storage (NYSE:PSA) is the dominant REIT issuer of preferreds and as such, several of its $4 billion worth of preferred share reside in PFXF.

Mortgage REITs (MREITs), such as Annaly Capital Management (NASDAQ:NLY) Agnc Investment Corp. (NASDAQ:AGNC), are also major REIT preferred issuers. Both are PFXF member firms.

PFXF could be the preferred mousetrap for investors seeking exposure to REIT-issued preferreds because the ETF removes the preferred selection burden while solving for some of the liquidity issues associated with the REIT corner of the preferred market.

“The REIT preferred market is geared toward retail investors with most issues carrying a $25 face value and traded on the NYSE like the issuer’s common shares,” according to Barron’s. “The retail orientation reflects the small size of REIT preferred issues, making them less liquid and therefore less appealing to institutional investors.”

PFXF, which sports a 30-day SEC yield of 6.78%, could also be a value play for income investors in 2023 because many REIT preferreds suffered deep double-digit losses this year as Treasury yields surged.

For more news, information, and strategy, visit the Beyond Basic Beta Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X