iShares Preferred and Income Securities ETF (NASDAQ: PFF)

Dernières nouvelles pour iShares Preferred and Income Securities ETF (NASDAQ:PFF)

iShares Preferred and Income Securities ETF

Financial Services

Real Estate

Utilities

Industrials

Communication Services

Other

Consumer Cyclical

Energy

Consumer Defensive

Technology

Basic Materials

The Fund seeks to track the investment results of the ICE Exchange-Listed Preferred & Hybrid Securities Index; the Underlying Index, which measures the performance of a select group of exchange-listed, U.S. dollar-denominated preferred securities, hybrid securities and convertible preferred securities listed on the New York Stock Exchange; NYSE or the Nasdaq Capital Market.

Wells Fargo & Co., Class A, Series L, Conv. Pfd.

Citigroup Capital XIII Pref

Albemarle Corp

Blackrock Cash Funds: Treasury, Sl Agency Shares

Bank of America Corp

Apollo Global Management Inc

NextEra Energy, Inc. 6.926

Jpmorgan Chase Pfd 'ee'

JP Morgan Chase & Co

Boeing Co

'bank of America Corp.0.0725 Preferred Series 'l' Convert'

Nextera Energy Units Inc

Hewlett Packard Enterprise Co.

Ares Management Corp

Kkr & Co Inc

Microchip Technology Incorporated

Virtus InfraCap U.S. Preferred Stock ETF

Global X U.S. Preferred ETF

Pool Safe Inc

ETRACS 2xMonthly Pay Leveraged Preferred Stock Index ETN due September 25, 2048

PORTOFINO RESOURCES INC by Portofino Resources Inc.

Portofino Resources Inc

InfraCap REIT Preferred ETF

Global X Variable Rate Preferred ETF

PFEIFFER VACUUM TECH ORD by Pfeiffer Vacuum Technology AG

Pfeiffer Vacuum Technology AG

Michael Saylor's Strategy (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSTR#NASDAQ">MSTR</a>), the world's largest corporate holder of Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) on Monday introduced a new preferred stock product: Series A Stride Preferred (STRD) is designed to provide a <a href="https://www.benzinga.com/crypto/25/06/45718471/michael-saylors-strategy-outperforms-apple-tesla-amazon-and-other-mag-7-stocks-and-its-not-even-close-has-the-bitcoin-treasury-bet-paid-off">high-yield return for long-term investors.</a>
The STRD <a href="https://x.com/saylor/status/1929871463521136697">offering</a> marks the company's third preferred instrument as it continues building a structured and diversified capital stack anchored in Bitcoin exposure.
STRD delivers a fixed 10% dividend with perpetual duration and ranks below Strategy's senior preferred instrument (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/STRF#NASDAQ">STRF</a>), but above the firm's common equity.
It is structured to sit at the riskier end of the firm's yield curve but compensates investors with its highest payout to date among Strategy's preferred options.
Unlike (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/STRF#NASDAQ">STRF</a>), which prioritizes capital preservation and mimics the risk profile of investment-grade fixed income, STRD is intended for investors seeking higher returns despite increased subordination.
Meanwhile, Strategy's other product STRK (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/STRK#NASDAQ">STRK</a>) offers an 8% dividend and the added benefit of convertibility, placing it squarely between STRF and STRD in terms of both yield and risk.
Strategy's common stock MSTR remains the base layer of its capital stack, functioning as the firm's core vehicle for leveraged Bitcoin exposure.
The STRD issuance is non-callable in typical market conditions, though it may be repurchased if certain events occur, such as a major corporate restructuring or tax-related change. 
Also Read: <a href="https://www.benzinga.com/crypto/cryptocurrency/25/06/45744569/michael-saylors-strategy-to-outperform-bitcoin-heres-how-it-could-happen">Michael Saylor&#8217;s Strategy To Outperform Bitcoin? Here&#8217;s How It Could Happen</a>
Dividends will be distributed quarterly, in cash, but only at the discretion of the board.
The firm claims STRD compares favorably to other high-yield investment vehicles on the market. 
For example, unlike ETFs such as iShares Preferred &amp; Income Securities ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PFF#NASDAQ">PFF</a>) and iShares Broad USD High Yield Corporate Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/USHY#NASDAQ">USHY</a>), STRD carries no management fees and offers a stronger yield proposition: 10% versus 7–8% for its ETF counterparts, while maintaining comparable volatility.
This new product aligns with Strategy's broader push to merge structured financial instruments with crypto exposure. 
The goal: deliver yield, diversification and exposure to digital assets in formats that fit traditional investment portfolios.
According to the company, the launch of STRD further extends its commitment to modernizing capital formation strategies using a layered and yield-tiered approach rooted in both crypto conviction and financial discipline.
Read Next: 
<ul class="wp-block-list">
<li><a href="https://www.benzinga.com/markets/25/06/45741645/ethereum-books-record-institutional-inflows-xrp-sees-outflows-what-is-going-on">Ethereum Books Record Institutional Inflows, XRP Sees Outflows: What Is Going On?</a></li>
</ul>
Image: Shutterstock

Coverage of Bitcoin, Etherum, Ripple and all the latest digital currencies.

Cryptocurrency

News

$BTC

MSTR

iShares S&P US Preferred Stock Index Fund

STRF

STRK

USHY

Strategy Launches STRD Preferred Stock Offering 10% Yield

<a href="https://in.benzinga.com/personal-finance/25/03/44358643/burned-out-microsoft-engineer-with-1-1m-portfolio-debates-early-retirement-what-options-do-i-have-for-retirement-reddit-weighs-in">Retirement</a> planning often asks for bold moves, especially when transitioning from wealth accumulation to income generation, and for many investors, this shift is pivotal.
This transition is not always straightforward, requiring a massive shift in mindset and approach. Growth-focused investments are excellent for <a href="https://www.benzinga.com/real-estate/24/04/38167234/building-wealth-brick-by-brick-homeownership-sparks-208-000-surge-in-net-worth-over-four-years">building wealth</a> but can be volatile and unpredictable. In retirement, you need stability and predictability, which is where <a href="https://in.benzinga.com/personal-finance/25/03/44374276/reddit-explodes-over-dividend-math-how-much-would-the-annual-dividend-be-for-a-280k-investment-investors-debate-schds-future-growth">dividend</a>-paying stocks and ETFs come into play.
Don't Miss:
<ul>
<li>Can you guess how many retire with a $5,000,000 nest egg? <a href="https://www.benzinga.com/money/5mil-nest-egg-adv">The percentage may shock you</a>.</li>
<li><a href="https://www.benzinga.com/money/arrived-centennial">Jeff Bezos-Backed Arrived Homes Hits A Big Sale On Charlotte Property – Investors Earning A 34.7% Return</a></li>
</ul>
One Reddit user, a 58-year-old investor with a $3 million portfolio, is making a bold move like this. He is considering reallocating $1 million to dividend-focused investments to test the waters before retiring. His goal is to generate $55,000 annually in dividends while making sure his portfolio remains steady enough to support his lifestyle in retirement.
&#8220;I have about a $3 million portfolio mostly spread between mutual funds and individual stocks but I have never focused on dividends. I am now 58 and thinking about putting 1/3 or $1 million into dividend ETFs and stocks in preparation for retirement,&#8221; the investor wrote.
His proposed allocation includes a combo of ETFs and stocks, such as Schwab U.S. Dividend Equity ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SCHD#NYSE">SCHD</a>), Realty Income Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/O#NYSE">O</a>), Ares Capital Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ARCC#NASDAQ">ARCC</a>), Utilities Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLU#NYSE">XLU</a>), JPMorgan Equity Premium Income ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JEPI#NYSE">JEPI</a>), and JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/JEPQ#NASDAQ">JEPQ</a>), aiming for a 5.5% yield.
Trending: The secret weapon in billionaire investor portfolios that you almost certainly don't own yet. <a href="https://www.benzinga.com/money/masterworks">See which asset class has outpaced the S&amp;P 500 (1995-2024) – and with near-zero correlation.</a>
Still, the poster is unsure whether his allocation is optimal, especially when it comes to stocks like O and ARCC, and whether the ETFs he selected offer enough diversification and yield. The Reddit community has offered the investor plenty of advice and insights, so let&#8217;s see these.
<h2 class="wp-block-heading">$1 Million Reallocation For Retirement–Reddit Analyzes the Stock and ETF Selection</h2>
Diversify and Consider Risk Management
Many community members mentioned how important diversification in investing is, especially when it comes to a retirement portfolio, so they suggested replacing individual stocks with ETFs for risk reduction and simplification.
&#8220;I'd avoid individual stocks in a retirement account, like O and ARCC. I'd go with the ETF [Putnam BDC Income ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pbdc#NYSE">PBDC</a>)] for more diversification. I&#8217;d have you investing $1 million into: SCHD 27%, JEPI 11%, [Vanguard International High Dividend Yield ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vymi#NASDAQ">VYMI</a>)] 11%, JEPQ 10.5%, [NEOS Nasdaq 100 High Income ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqqi#NASDAQ">QQQI</a>)] 9.7%, [NEOS S&amp;P 500 High Income ETF (CBOE: SPYI)] 9.5%, PBDC 6.6%, [Arbor Realty Trust, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/abr#NYSE">ABR</a>)] 6%, [STAG Industrial, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/stag#NYSE">STAG</a>)] 3.55%, [Reaves Utility Income Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/utg#NYSE">UTG</a>)] 3.5%, and your yield would be over 8% with $6,800 per month dividend income on average,&#8221; a comment reads.
&#8220;Switch XLU with more SCHD. I like [VICI Properties Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vici#NYSE">VICI</a>)] more than O; VICI is literally recession-proof. Also, I would get rid of JEPI for more JEPQ or SPYI,&#8221; a Redditor suggested.
A user pointed out that the investor has no global diversification, which can offer stability for a portfolio.
&#8220;You&#8217;ve got no international positions either. Legendary investors like Warren Buffett and Peter Lynch have both said that you should invest in companies that any idiot can run because sooner or later, one will. The same is true of countries,&#8221; he said.
See Also: Have $200K saved?<a href="https://www.benzinga.com/money/have-200k-saved-heres-how-to-turn-it-into-lasting-wealth"> Here's how to turn it into lasting wealth</a>
Think About Yield Optimization and Tax Efficiency
Commenters also focused on how the investor can maximize yield while maintaining tax efficiency, particularly since he is planning for retirement.
&#8220;I would personally put the bulk of money in high-yield funds like [iShares Preferred and Income Securities ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pff#NASDAQ">PFF</a>)] with a 6% yield, PBDC 9%, and JEPQ. ARCC is a [business development company] and they are required to pay out most of their earnings so the dividends are high for many BDCs. PBDC invests in the best BDCs they can find, including ARCC. This adds diversification. You could also have some money in [Schwab High Yield Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/scyb#NYSE">SCYB</a>)], a corporate bond fund with a yield of 7%, and the rest in SCHD and XLU. I don&#8217;t see a reason to keep JEPI,&#8221; a Redditor suggested.
&#8220;We are retired early and in the process of migrating from dividend growth to dividend income in our taxable account. SPYI and [NEOS Nasdaq 100 High Income ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqqi#NASDAQ">QQQI</a>)] use return of capital in their distributions so they work well in taxable accounts. I also like some [closed-end funds] such as [Eaton Vance Enhanced Equity Income Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/eoi#NYSE">EOI</a>)] and [Eaton Vance Enhanced Equity Income Fund II (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/eos#NYSE">EOS</a>)] that use long-term capital gains and/or return of capital in their distributions,&#8221; a retiree in the comments recommended.
A Redditor considered the poster&#8217;s strategy way too conservative and advised him to go more aggressive to boost income and overall returns.
&#8220;In my opinion, you are short-changing yourself with such a conservative dividend income portfolio. I hold JEPQ and other high dividend funds and ETFs and am getting a yield of 12%+ with 26% total return in 2024,&#8221; he said.
Read Next:
<ul>
<li>Dogecoin millionaires are increasing –<a href="https://www.benzinga.com/money/dogecoin-millionaires"> investors with $1M+ in DOGE revealed!</a></li>
<li>These five entrepreneurs are worth $223 billion –<a href="https://www.benzinga.com/money/arrived-homes-private-credit-fund"> they all believe in one platform that offers a 7-9% target yield with monthly dividends</a></li>
</ul>

Small Cap

Personal Finance

ARCC

JEPI

JEPQ

PBDC

QQQI

SCHD

SCYB

SPYI

STAG

VICI

VYMI

58-Year-Old With $3M Portfolio Makes Bold Retirement Move – 'I Want To Test It Out Before I Actually Retire' With $1M In Dividend Stocks

Investors are often driven by the pursuit of massive <a href="https://in.benzinga.com/analyst-ratings/analyst-color/25/03/44378283/ralph-laurens-prospects-of-market-share-gains-margin-expansion-turns-this-analyst-bullish">gains</a> and few assets capture this ambition better than individual stocks–like Nvidia Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>)–that have seen a meteoric climb.
For many, high returns from individual <a href="https://www.benzinga.com/markets/25/03/44239013/retirement-investor-with-21-600year-in-dividends-needs-2-200-more-per-month-what-high-yield-stocks-w">stocks</a> and/or options trading are irresistible because such investments can turn a modest sum of money into life-changing <a href="https://www.benzinga.com/markets/25/02/43801235/paper-mill-worker-builds-1-7-million-fortune-through-investing-top-3-stocks-that-boosted-his-wealth">wealth</a>.
This is the case of a 32-year-old ex-military who made $700,000 in options trading but is unsure of what to do next. After hitting it big, the investor is wondering whether he should double down on high-risk strategies, or pivot to more stable, long-term investments, so he&#8217;s taken to Reddit to seek advice.
Don't Miss:
<ul>
<li>Hasbro, MGM Resorts, and Sketchers Use this Pre-IO AI Marketing Firm — <a href="https://www.benzinga.com/money/rad-intel">and You Can Own a Piece of it From $0.55/Share</a></li>
<li>Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing —<a href="https://www.benzinga.com/money/boxabl"> this is your last chance to become an investor for $0.80 per share.</a></li>
</ul>
With 4,200 shares of NVDA at a cost basis of $69 and $350,000 in cash, he is at a crossroads. His end goal is to preserve and grow his wealth while minimizing risk because he thinks his options trading run may be coming to an end. Still, he isn&#8217;t sure about what to do next.
&#8220;I was in the military but I started trading options and just did that for a few years. I think my run is at the end, though. Finishing school and getting a job now in the next year. I've been waiting for a pullback, unsure when to hop in. Kinda just wanna be done with it,&#8221; he wrote.
He asked whether he should put all his money in Schwab U.S. Dividend Equity ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SCHD#NYSE">SCHD</a>), which is known for its focus on high-quality dividend-oriented stocks. The community offered plenty of suggestions so let&#8217;s analyze the comments and distill the most relevant advice below.
Trending: This Startup Is On The Brink Of A Huge Disruption To The $654 Billion Industry – <a href="https://www.benzinga.com/money/venhub-adv">Invest In It Before It Fulfills 800 Pre-Orders</a>
<h2 class="wp-block-heading">$350,000 in SCHD? Reddit Assesses His Plan and Gives Suggestions</h2>
Avoid Putting All Your Money in One Asset
One of the most prevalent advice in the comments was to avoid putting all the money into a single investment–SCHD in this case–and diversify the portfolio into several assets.
&#8220;At age 32, I think you should consider a mix of SCHD, [Schwab U.S. Large-Cap Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/schg#NYSE">SCHG</a>)], and perhaps [Schwab International Equity ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/schf#NYSE">SCHF</a>)]. Perhaps 45/45/10 or 50/45/5,&#8221; a Redditor advised.
A commenter suggested the investor a mix of growth and dividend-paying investments, as well as international exposure.
&#8220;Personally though, I&#8217;d put $50,000 to $100,000 into ex-U.S. markets. [Vanguard International High Dividend Yield ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vymi#NASDAQ">VYMI</a>)], [Legg Mason International Low Volatility High Dividend ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/lvhi#NASDAQ">LVHI</a>)], [Franklin International Core Dividend Tilt Index ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/divi#NYSE">DIVI</a>)] are a few dividend-focused options,&#8221; he said.
Recommending a mix of individual stocks, ETFs, and dividend-paying assets, this Reddit user provided a detailed illustration of how diversification can be achieved in a portfolio.
&#8220;$50,000 [Vanguard S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/voo#NYSE">VOO</a>)], $50,000 growth stocks like [Apple Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>)], NVDA, and others, $50,000 SCHD, $50,000 [JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/jepq#NASDAQ">JEPQ</a>)], $50,000 [JPMorgan Equity Premium Income ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jepi#NYSE">JEPI</a>)], $50,000 [Simplify Volatility Premium ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/svol#NYSE">SVOL</a>)], $50,000 ([Pfizer Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pfe#NYSE">PFE</a>)], and other dividend stocks),&#8221; his suggestion reads.
&#8220;At 30, SCHG 50% VOO 50%,&#8221; another comment says.
See Also: Deloitte's fastest-growing software company partners with Amazon, Walmart &amp; Target – <a href="https://www.benzinga.com/money/mode-mobile-2">Many are rushing to grab 4,000 of its pre-IPO shares for just $0.26/share!</a>
Consider Tax Efficiency and Long-Term Growth
Another recurring theme in the thread was the importance of tax efficiency and the possible drawbacks of focusing only on dividend income, with many Redditors suggesting that dividend-paying ETFs might not be the best option when it comes to taxes.
&#8220;Dumping $350,000 in there is a monumentally terrible idea. SCHD underperforms the S&amp;P 500 with dividends reinvested and not even counting the extra tax drag. You&#8217;d be creating more taxable income for yourself which is a terrible strategy. You want to minimize income and maximize net worth. Dumping all of your capital into something paying income is the opposite of what you should be doing,&#8221; a Reddit user wrote.
A Redditor suggested to the investor several other options that he says would yield more returns than SCHD.
&#8220;SCHD is a good fund, but is it best for you? With $350,000 invested, it will produce about $12,000 a year. Instead, $350,000 invested in [iShares Preferred and Income Securities ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pff#NASDAQ">PFF</a>)] with a 6% yield, would earn you about $21,000 a year. Or you could invest in [business development companies] using [Putnam BDC Income ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pbdc#NYSE">PBDC</a>)] and earn $31,000. Or [NEOS Nasdaq-100 High Income ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqqi#NASDAQ">QQQI</a>)] with a 23% yield and earn $45,000,&#8221; the commenter said.
&#8220;SCHD 30%, VOO 20%, [Realty Income Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/o#NYSE">O</a>)] 14%, [PepsiCo Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pep#NASDAQ">PEP</a>)] 14%, [Enterprise Products Partners L.P. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/epd#NYSE">EPD</a>)] 12%, [Ares Capital Corporation (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/arcc#NASDAQ">ARCC</a>)] 10%,&#8221; a user recommended.
Read Next:
<ul>
<li>It&#8217;s no wonder Jeff Bezos holds over $250 million in art — <a href="https://www.benzinga.com/money/masterworks">this alternative asset has outpaced the S&amp;P 500 since 1995, delivering an average annual return of 11.4%. Here&#8217;s how everyday investors are getting started.</a></li>
<li>‘Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. <a href="https://www.benzinga.com/money/mode-mobile-2">You can invest today for just $0.26/share with a $1000 minimum.</a></li>
</ul>

AAPL

DIVI

LVHI

NVDA

SCHF

SCHG

SVOL

32-Year-Old Investor With Massive NVDA Gains And $350K Cash Asks Reddit: 'What's Stopping Me From Putting It All In SCHD?'

For many people, the idea of passive income is beyond charming, and it is what drives countless individuals to explore different <a href="https://in.benzinga.com/personal-finance/25/03/44335110/stupid-20-year-investment-plan-investor-questions-200000-dividend-strategy-is-it-stupid-to-put-in-that-much-into-schd">investment</a> approaches.
Still, one of the most common challenges investors face, especially those at the beginning of their journey, is whether to prioritize growth assets or <a href="https://in.benzinga.com/markets/25/03/44196217/53-year-old-with-200k-to-invest-seeks-best-stocks-for-retirement-should-i-go-all-in-on-etfs-or-bet-b">dividend</a> investing. Both methods have their benefits, but choosing the right course can be difficult, especially when balancing short-term financial needs with long-term <a href="https://www.benzinga.com/personal-finance/24/12/42301100/most-americans-dont-see-wealth-as-the-key-to-financial-success-heres-what-matters-more-to-59-of-them">wealth</a> expansion.
Let&#8217;s dive into the story of a 33-year-old investor with a $40,000 portfolio who is faced with this very challenge. The Reddit user has $30,000 of the total amount invested in dividend-focused assets, generating approximately $190 per month in passive income after taxes.
Don't Miss:
<ul>
<li><a href="https://www.benzinga.com/money/are-you-rich">Are you rich?</a> Here&#8217;s what Americans think you need to be considered wealthy.</li>
<li>Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die."<a href="https://www.benzinga.com/money/warren-buffet-make-money-when-you-sleep"> Here&#8217;s how you can earn passive income with just $100.</a></li>
</ul>
His goal is to build a portfolio that will earn him enough dividends that he can live off them and to achieve this, he plans on investing 80% to 100% of his active income into dividend shares, ETFs, and funds.
&#8220;For now, I&#8217;m thinking maybe investing up to 20% of my portfolio to &#8220;growth&#8221; like [ProShares UltraPro QQQ (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tqqq#NASDAQ">TQQQ</a>)] and [ProShares UltraPro S&amp;P 500 (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/upro#NYSE">UPRO</a>)], only on big corrections, and 80% of my portfolio continue to hold/reinvest in dividend assets. Or maybe focus only on growth, sell all dividend assets, and invest 80% now only in Index ETFs ([SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>)], [Invesco QQQ Trust (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>)]) and 20% in leverage ETFs&#8230; There is a psychological aspect too, when I see passive income every month–it&#8217;s very motivating to continue investing more, to grow dividend income. So, dilemma&#8230; What do you think?&#8221; the young investor wrote.
Trending: The secret weapon in billionaire investor portfolios that you almost certainly don't own yet. <a href="https://www.benzinga.com/money/masterworks">See which asset class has outpaced the S&amp;P 500 (1995-2024) – and with near-zero correlation.</a>
The Reddit community took the comments by storm, sharing advice, insights, and suggestions, so let&#8217;s dive deep into these.
<h2 class="wp-block-heading">Invest $40,000 in Growth-Focused Assets or Dividends? Reddit Responds</h2>
Prioritize Growth Assets Now, Transition to Dividends Later
Many Reddit users advised the poster to focus on growth while he&#8217;s young as this strategy typically yields higher returns over the long run.
&#8220;If you&#8217;re young, I&#8217;d stick the money in a growth fund and let it ride. If you love dividends you can drop or reinvest the dividends into growth. There&#8217;s no wrong answer&#8230; but if you&#8217;re young, you&#8217;ll end up with more money investing in &#8220;growth&#8221; now. I&#8217;m 57 and started building my dividend portfolio about 15 years ago&#8230; I live on them now,&#8221; a Redditor said.
One commenter suggested a phased approach and mentioned several funds he advised the poster to invest in.
&#8220;When younger, just try and match the market. Meaning, just buy [Vanguard S&amp;P 500 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/voo#NYSE">VOO</a>)] or [Vanguard Total Stock Market ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vti#NYSE">VTI</a>)]. Averaging 10% annually, or whatever the market is doing for 30 years, is guaranteed millionaire-making based on history. If you get crazy, follow Professor G's 3-fund approach and add in [Invesco QQQ Trust (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>)] and [Schwab U.S. Dividend Equity ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/schd#NYSE">SCHD</a>)]. SCHD will be your doorway to dividends. Then, as you start nearing retirement, start pivoting more of your portfolio to high-quality income and dividend stuff. For me, that was [JPMorgan Equity Premium Income ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jepi#NYSE">JEPI</a>)], [JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/jepq#NASDAQ">JEPQ</a>)], [iShares Preferred &amp; Income Securities ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pff#NASDAQ">PFF</a>)], and about 15 other income investments and stocks,&#8221; his comment reads.
&#8220;Obviously, wealth building should be your first goal. You could use value stocks or bonds that pay dividends for diversification, but diversification doesn&#8217;t speed up wealth building, it just softens market drawdowns (and restricts bull markets),&#8221; another Redditor suggested.
A user also recommended the investor focus on growth first and later transition to dividend-paying assets.
&#8220;Focus on growth assets first, build a larger capital base, and transition into dividend investing later. In my opinion. This is my plan. Dividends are great until you have to start eating into the balance to pay large expenses,&#8221; he said.
See Also: Have $200K saved?<a href="https://www.benzinga.com/money/have-200k-saved-heres-how-to-turn-it-into-lasting-wealth"> Here's how to turn it into lasting wealth</a>
Psychological Motivation Vs. Financial Logic
Commenters also admitted the psychological benefits of dividend investing the poster mentioned, especially the motivation that comes from seeing regular income, but they also warned against letting feelings override a good financial plan.
&#8220;Many people spend their whole lives chasing an imaginary number. First, define for yourself what &#8220;enough&#8221; is and keep doing what you&#8217;re doing, you&#8217;re probably better off than you realize. Also, the &#8220;fastest&#8221; way is very rarely the most &#8220;logical&#8221; way, but the biggest thing you can do after cutting back spending is increase your income,&#8221; a commenter said.
A user cautioned against investing in too many assets and ending up having too many tickers to handle, suggesting a few ETFs instead.
&#8220;One thing I would caution against though, regardless of which way you go, is having too many tickers and positions to monitor. Once you get into individual stocks, managing more than 15-20 becomes basically a full-time job; at least to do it properly. So my personal recommendation would be to move into a few ETFs that align with your investment thesis unless you feel you can manage that many individual positions,&#8221; the Redditor advised.
Read Next:
<ul>
<li>Dogecoin millionaires are increasing –<a href="https://www.benzinga.com/money/dogecoin-millionaires"> investors with $1M+ in DOGE revealed!</a></li>
<li>How do billionaires pay less in income tax than you?<a href="https://www.benzinga.com/money/tax-deferring-adv"> Tax deferring is their number one strategy</a>.</li>
</ul>

TQQQ

UPRO

Investor With $40,000 Portfolio Wonders If He Should Pick Dividend Investing Or Growth First – 'Would You Prioritize Dividends Or Growth?

On CNBC&rsquo;s &quot;<a href="https://www.cnbc.com/video/2023/04/12/final-trades-vertex-conocophillips-moderna-more.html">Halftime Report Final Trades</a>,&quot; Anastasia Amoroso of JP Morgan Private Bank named iShares Preferred and Income Securities ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pff#NYSE">PFF</a>) as her <a href="https://www.benzinga.com/news/23/04/31766634/rpm-international-rambus-and-2-other-stocks-insiders-are-selling"> final trade. </a>
Jim Lebenthal of Cerity Partners said Vertex Pharmaceuticals Incorporated (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/vrtx#NASDAQ">VRTX</a>)&nbsp;is a &quot;new position&quot; for him.
Vertex announced Health Canada market authorization for ORKAMBI in children with cystic fibrosis aged 1 to less than 2 years.
Don&rsquo;t forget to check out our <a href="https://www.benzinga.com/premarket/"> premarket coverage here</a>.
Stephen Weiss of Short Hills Capital Partners named Moderna, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/mrna#NASDAQ">MRNA</a>) as his final trade.
Moderna said its first influenza candidate, mRNA-1010, did not accrue sufficient cases at the interim efficacy analysis to declare early success in the Phase 3 Northern Hemisphere efficacy trial and the independent DSMB recommended continuation of efficacy follow-up.
Joseph Terranova of Virtus Investment Partners picked ConocoPhillips (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cop#NYSE">COP</a>).
ConocoPhillips disclosed a detailed 10-year operating and financial plan at an analyst &amp; investor meeting. The company projects strong cash flow, with compounded annual growth rate (CAGR) in cash from operations and FCF of around 6% and 11%.
Price Action: ConocoPhillips shares rose 0.7% to close at $107.53, while Moderna rose 0.2% to settle at $155.56 on Wednesday. Vertex Pharmaceuticals shares added 0.5% to settle at $326.37 during the session. 
Check This Out: <a href="https://www.benzinga.com/trading-ideas/long-ideas/23/04/31767443/top-5-financial-stocks-that-are-set-to-fly-in-april"> Top 5 Financial Stocks That Are Set To Fly In April </a>
Photo via Pixabay.&nbsp;

Markets

Media

Trading Ideas

MRNA

VRTX

Moderna, ConocoPhillips, Vertex Pharmaceuticals And This ETF: CNBC's 'Final Trades'

The Office of North Carolina Representative Virginia Foxx has reported a sale of iShares Preferred and Income Securities ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PFF#NASDAQ">PFF</a>) stock on April 4, 2023. According to the Periodic Transaction Report the transaction was placed on April 4, 2023.
What Happened: A Periodic Transaction Report from the House of Representatives Clerk's Office on April 4, 2023 showed that Foxx sold $50,001 - $100,000 of <a href="www.benzinga.com/quote/PFF">iShares Preferred and Income Securities ETF</a> stock.
iShares Preferred and Income Securities ETF shares are trading down 0.11% at $30.93 at the time of writing.
<h3>The Importance of Congressional Transactions</h3>
Congressional transactions shouldn't be used primarily to make an investing decision, however, they can be an important factor for an investor to consider.
A Congressional transaction is when any Representative or Senator either buys or sells an individual stock. Anyone working in Congress must file a Periodic Transaction Report to inform the public of their recent transaction within 30 days of being notified of the transaction and within 45 days of the transaction date.
When a Senator or Representative makes a new purchase, that could be an indication that they expect the stock to rise.
A sale, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.
In April 2012, Former President Barack Obama signed the STOCK Act into law. The act prohibits members of Congress from using private information given to them by their position for personal gain such as buying or selling a stock. The act also expanded disclosure requirements for members of Congress by requiring them to file a monthly disclosure. 
<h3>Trade Recap</h3>
A April filing states that North Carolina Representative Virginia Foxx sold shares of iShares Preferred and Income Securities ETF. The exact amount of the transaction remained unknown but the filing states a range of $50,001 - $100,000.
This article was generated by Benzinga's automated content engine and reviewed by an editor.

Government

Politics

General

Recent Report Shows That Rep. Virginia Foxx Sold Up to $100K Worth of iShares Preferred and Income Securities ETF Stock

A common tactic among issuers of exchange-traded funds when bringing new products to market that are similar to existing funds is to undercut established rivals on fees. That is what Global X did Wednesday when it launched the Global X U.S. Preferred ETF (BATS: PFFD).
The Global X U.S. Preferred ETF charges 0.23 percent per year, or $23 on a $10,000 investment, well below the preferred ETF category average of 0.48 percent. The iShares U.S. Preferred Stock ETF (NASDAQ: <a class="ticker" href="/stock/pff#NASDAQ">PFF</a>), the largest preferred stock ETF trading in the U.S., has an annual expense ratio of 0.47 percent.
Preferred stocks are hybrid securities with bond- and equity-like traits. The asset class is beloved for its high yields and regular dividends, but that also makes it vulnerable to rising Treasury yields. Preferred stockholders rank ahead of common equity investors in the event of issuer default or bankruptcy. While not guaranteed, preferred dividends are priorities for issuing companies because failure to pay preferred dividends can harm a company&#39;s credit rating.
<h3>More About The New Preferred ETF</h3>
PFFD tracks the BofA Merrill Lynch Diversified Core U.S. Preferred Securities Index, providing investors with broad-based exposure to U.S. preferred securities.
Related Link: <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/09/10048419/renewed-enthusiasm-for-bank-loan-etfs">Banking On Bank Loans</a>
Preferred stocks &ldquo;play an important role in potentially improving a portfolio&#39;s yield, which may be particularly appealing to investors during this persistently low interest rate environment,&rdquo; said New York-based Global X <a href="http://www.prnewswire.com/news-releases/global-x-funds-announces-launch-of-the-global-x-us-preferred-etf-pffd-300518820.html">in a statement</a>. &ldquo;Preferreds are junior to bonds on a firm&#39;s capital structure, therefore often resulting in higher yields than similar fixed income securities. In addition, the income received from preferred stocks is often classified as qualified dividend income, which is taxed at a lower rate than the income received from corporate bonds, which is usually taxed as ordinary income.&rdquo;&nbsp;
The new ETF&#39;s &ldquo;underlying index includes fixed, floating and variable-rate preferred securities with a minimum amount outstanding of $100 million,&rdquo; according to Global X. Issues are capped at 10 percent of the fund&#39;s weight. Currently, the largest issue in PFFD is 3.3 percent of the fund&#39;s weight and the new ETF&#39;s top 10 holdings combine for just about 18 percent of its weight.
<h3>Not The First</h3>
PFFD is the second preferred ETF in the Global X stable, following the Global X SuperIncome Preferred ETF (NYSE: <a class="ticker" href="/stock/spff#NYSE">SPFF</a>). That ETF debuted over five years ago and now has almost $246 million in assets under management and a 30-day SEC yield of nearly 6.8 percent.
Related Link: <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/09/10048455/etf-fee-competition-expect-more-of-the-same">Expect More ETF Fee Battles</a>

Long Ideas

Bonds

Dividends

Specialty ETFs

New ETFs

ETFs

SPFF

A New Preferred ETF On The Cheap

Among the high-yielding asset classes benefiting from the Federal Reserve holding off on raising interest rates to this point in the year are preferred stocks and the corresponding exchange-traded funds.
TheiShares S&amp;P US Pref Stock Idx Fnd (ETF) (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>) has a 30-day SEC yield of 5.3 percent and is up 6.6 percent year-to-date. Income investors embraced preferred stocks, in large part, because of high yields, but as the spike in Treasury yields earlier this year and in 2013 taught investors, high-yielding assets are <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5725602/just-as-it-sort-of-perked-up-a-dividend-etf-lost-more-money">vulnerable to rising rates</a>.
<h3>The Appeal Of A Preferred Stock</h3>
A preferred stock is a type of security that offers characteristics of both bonds and equities. The <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5837534/preferred-stock-etfs-provide-potential-fed-clues">primary source</a> of allure with preferreds is yield, although preferred shareholders are higher on the totem pole in the event of issuer bankruptcy or default than are common equity holders.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/09/8413447/a-rookie-etf-to-consider">A Rookie ETF To Consider</a></bzrelatedlink>
However, investors&#39; desire for income via preferreds could be tested in the near term. The August jobs report out Thursday could provide the Federal Reserve an avenue with which to soon raise interest rates. As it is, Fed fund futures point to a rate hike in December. Data suggest a rush away from preferreds could be painful because so much money has piled into ETFs such as PFF.
&ldquo;The surging AUM mostly occurred since the start of 2015 as the asset class registered $10 billion plus of inflows. Preference stock ETFs were in fact the most popular fixed income asset class of last year in terms of relative inflows, as the $4.8 billion that flowed into the asset class over 2015 represented 30 percent of the AUM seen at the start of the year, more than any of the seven bond ETF asset classes tracked by Markit ETF Analytics,&rdquo; said Markit <a href="http://www.markit.com/Commentary/Get/31082016-Credit-Preferred-stocks-become-preferred-ETFs">in a recent note</a>.
<h3>Ignorance Is (Rarely) Bliss</h3>
Of all the crowded trades market observers are pontificating about this year, think Treasurys, low volatility ETFs and gold, just to name a few, preferreds never enter the conversation. Ignorance is not always bliss, not a time when PFF has added $2.9 billion in new assets year-to-date, a fair percentage of its total AUM, and certainly not when the Fed could be nearing another rate hike.
Conversely, the benchmark ETF offering exposure to convertible bonds, the best-performing fixed income asset during Fed tightening cycles, has seen just $103.9 million in year-to-date inflows.
Clearly, investors like the promise of almost guaranteed income from preferreds, indicating they are not expecting the Fed to embark upon an all-out tightening cycle.
&ldquo;The differing levels of investor enthusiasm towards the two asset classes shows that investors in the current market would rather pass on capital upside in order to receive the type of guaranteed income that made preference stock such a popular investment with Warren Buffet,&rdquo; added Markit.
Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email <a href="mailto:feedback@benzinga.com">feedback@benzinga.com</a> with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Federal Reserve

Fed Could Initiate The Push For Preferred ETFs

With U.S. interest rates hovering around historic lows, the income from many fixed-income investors is dwindling. And with few, if any, sign from the Federal Reserve that interest rates are going to rise anytime soon, investors are increasingly seeking higher-yielding assets within the fixed income universe.
That includes this year&#39;s well-documented return to preferred stocks and the corresponding exchange-traded funds. Income investors embraced preferred stocks, in large part, because of high yields, but as the spike in Treasury yields earlier this year and in 2013 taught investors, high-yielding assets are <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5725602/just-as-it-sort-of-perked-up-a-dividend-etf-lost-more-money">vulnerable to rising rates</a>.
Of course, sensitivity to rising rates comes by way of a bond&#39;s duration; the longer the duration, the more sensitive it is to fluctuations in interest rates.
<h3>What Are Preferreds?</h3>
A preferred stock is a type of security that offers characteristics of both bonds and equities. The <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5837534/preferred-stock-etfs-provide-potential-fed-clues">primary source</a> of allure with preferreds is yield, although preferred shareholders are higher on the totem pole in the event of issuer bankruptcy or default than are common equity holders.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/7911570/why-its-a-good-idea-to-prefer-preferred-etfs">Why It's A Good Idea To Prefer Preferred ETFs</a></bzrelatedlink>
The Elkhorn S&amp;P High Quality Preferred ETF (BATS: EPRF) represents a new avenue to an old asset class, and, as it matures, EPRF could prove to be a better preferred mousetrap.
The Elkhorn S&amp;P High Quality Preferred ETF follows the S&amp;P U.S. High Quality Preferred Stock Index, &ldquo;which selects fixed-rate investment grade preferred issues (BBB- or higher) from U.S. listed preferred stocks and maintains an allocation of 75 percent to cumulative preferreds,&rdquo; according to Illinois-based <a href="http://www.elkhorn.com/etf/detail.aspx?ticker=eprf">Elkhorn</a>.
Call risk is an issue to consider with preferred strategies, and EPRF might have some advantages on that front as well.
<h3>The Appeal Of EPRF</h3>
&ldquo;The analysis of the <a href="http://us.spindices.com/indices/fixed-income/sp-us-preferred-stock-index">S&amp;P U.S. Preferred Stock Index</a> shows that if all preferreds at increased risk of being called are indeed called over the next three years, preferreds would lose approximately 17bps per year versus high yield. For yield-focused investors, the preferreds&rsquo; call risk appears insignificant,&rdquo; said Elkhorn&#39;s Graham Day on the <a href="http://www.indexologyblog.com/2016/08/15/think-rates-will-stay-low-consider-preferreds-over-high-yield-bonds/">S&amp;P Dow Jones Indexology blog</a>.
EPRF&#39;s underlying &ldquo;high-quality index includes investment-grade constituents only, whereas 44 percent of the broader preferred index includes speculative-grade stocks and another 14 percent is not rated. Similar to corporate bonds, preferred stocks are sensitive to changes in interest rates, however, also similar to equity, preferred stocks exhibit more volatility than most fixed income asset classes,&rdquo; according to <a href="http://www.indexologyblog.com/2016/06/20/sp-u-s-high-quality-preferred-stock-index-a-venn-of-an-index/">S&amp;P Dow Jones Indices</a>.
At a time when investors are emphasizing quality, notable is the fact that EPRF is the only preferred ETF going out of its way to do the same.
&ldquo;Within the preferreds space, high quality, investment grade preferreds offer investors access to preferreds while providing unique exposure outside of banks or the UK as well as a defensive tilt to hedge against down markets. In summary, preferreds appear well positioned against high yield bonds for investors looking for a combination of higher yields and lower risks,&rdquo; added Day.
Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email <a href="mailto:feedback@benzinga.com">feedback@benzinga.com</a> with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Reasons To Stick With Preferreds And This ETF

Preferred stocks and the relevant exchange-traded funds are once again a popular destination for income investors thanks in large part to the Federal Reserve continually holding off on raising interest rates to this point in the year.
<h3>High Quality Preferred Joins BATS</h3>
Relative to other corners of the fixed income ETF landscape, the preferred space is sparsely populated, indicating there is room for innovation and competition. Some of that new competition and innovation arrived last month with the debut of the Elkhorn S&amp;P High Quality Preferred ETF (BATS: EPRF). What makes EPRF unique is its underlying index, which possesses an emphasis on quality not found with traditional preferred equity benchmarks.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/06/8128053/fed-indulges-this-preferred-etf">Fed Indulges This Preferred ETF</a></bzrelatedlink>
The Elkhorn S&amp;P High Quality Preferred ETF follows the S&amp;P U.S. High Quality Preferred Stock Index, &ldquo;which selects fixed-rate investment grade preferred issues (BBB- or higher) from U.S. listed preferred stocks and maintains an allocation of 75 percent to cumulative preferreds,&rdquo; according to Illinois-based <a href="http://www.elkhorn.com/etf/detail.aspx?ticker=eprf">Elkhorn</a>.
<h3>High Yield And Preferreds</h3>
Like other high-yielding asset classes, preferred stocks and the corresponding ETFs are viewed as negatively correlated to hawkish changes in U.S. borrowing costs. Income investors embraced preferred stocks, in large part, because of high yields, but as the spike in Treasury yields last year and in 2013 taught investors, high-yielding assets are <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5725602/just-as-it-sort-of-perked-up-a-dividend-etf-lost-more-money">vulnerable to rising rates</a>. 
EPRF&#39;s underlying &ldquo;high-quality index includes investment-grade constituents only, whereas 44 percent of the broader preferred index includes speculative-grade stocks and another 14 percent is not rated.&nbsp; Similar to corporate bonds, preferred stocks are sensitive to changes in interest rates, however, also similar to equity, preferred stocks exhibit more volatility than most fixed income asset classes,&rdquo; according to <a href="http://www.indexologyblog.com/2016/06/20/sp-u-s-high-quality-preferred-stock-index-a-venn-of-an-index/">S&amp;P Dow Jones Indices</a>. 
As has been noted in this space, preferred stocks have perks. Preferred stocks and ETFs have another advantage: Even if the issuer cuts or suspends the dividend on its common stock, it essentially must continuing pay preferred dividends.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/06/8128056/the-long-term-case-for-housing-etfs">The Long-Term Case For Housing ETFs</a></bzrelatedlink>
&ldquo;Unlike common stock, most preferred dividends are cumulative, meaning dividend payments accrue even if not paid when scheduled. If a firm suspends paying dividends, it must pay preferred shareholders in full before paying any dividends to common shareholders,&rdquo; said S&amp;P Dow Jones Indices <a href="http://www.indexologyblog.com/2016/04/29/preferences-of-preferred-stock/">in a recent note</a>.
<h3>Unique Advantages For EPRF</h3>
However, EPRF has its own set of advantages. As S&amp;P Dow Jones Indices, investment-grade and cumulative preferreds, such as the issues found in EPRF, often have lower drawdowns during times of market stress than traditional preferred stocks.

Why This Could Be The Preferred ETF Of The Future

This year&#39;s flows action in the world of exchange-traded funds has largely been defined by risk-off sentiment. That includes advisors and investors flocking to fixed income ETFs.
At various points this year, six of the top 10 asset-gathering ETFs were bond funds. Although that number has dropped to four, that does not diminish investors&#39; thirst for bond ETFs. In fact, that desire was on display in May as bond ETFs <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/7969910/low-fee-bond-etfs-are-where-its-at">kept packing on assets</a>.
<h3>Asset Gathering</h3>
&ldquo;Investors put an additional $4.2 billion of net new money into fixed income ETFs in May, pushing the year to date flows figure to $42 billion, according to Factset data. While demand remained strong for actively managed fixed income mutual funds this year, up until last week, a wide variety of lower-cost ETFs that offer intra-day liquidity and typically seek to passively replicate an index have been gaining share in 2016,&rdquo; said <a href="http://trymsatoday.com/">S&amp;P Capital IQ</a> in a note out Monday. 
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/06/8076757/its-getting-pricey-to-chase-yield">It's Getting Pricey To Chase Yield</a></bzrelatedlink>
The iShares Core U.S. Aggregate Bond Fund (NYSE: <a class="ticker" href="/stock/agg#NYSE">AGG</a>) is this year&#39;s top asset-gathering bond ETF and only the SPDR Gold Trust (ETF) (NYSE: <a class="ticker" href="/stock/gld#NYSE">GLD</a>) has added more new assets year-to-date than AGG. Making AGG&#39;s haul all the more impressive is the fact that has added more than double the new money as its primary rival, the Vanguard Total Bond Market ETF (NYSE: <a class="ticker" href="/stock/bnd#NYSE">BND</a>). However, BND is still among the top 10 asset-gathering ETFs. 
<h3>Bond ETF Flows And Yield Hunting</h3>
Bond ETF flows also highlight investors&#39; appetite for yield, and that hunt for yield is helping ETFs holding preferred stocks and senior loans <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/8033498/sizing-up-senior-loan-etfs">added new assets </a>this year.
&ldquo;Another popular ETF in May was the PowerShares Senior Loan Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/bkln#NYSE">BKLN</a>)), which invests in the 100 largest bank loans with floating rate coupons. BKLN gathered $510.1 million of new assets in May, erasing the outflows the ETF suffered through the first four months of 2016. Unlike fixed-rate ETFs, coupons of BKLN&#39;s holdings adjust higher as interest rates rise,&rdquo; said S&amp;P Capital IQ.
Floating rate notes and senior loans are unique in that their yield is tied to a benchmark such as LIBOR, rather than being fixed. Loans are also higher on the capital structure than other unsecured obligations, and some even carry floors to insure you earn a respectable yield even if rates stay low. Their coupon rate typically resets every 90 days, resulting in a duration shorter than three months, <a href="http://www.benzinga.com/etfs/specialty-etfs/14/05/4586380/uncertainty-on-the-rise-for-bank-loan-etfs">Benzinga previously reported</a>.
&quot;Meanwhile, iShares US Preferred Stock ETF (iShares S&amp;P US Pref Stock Idx Fnd (ETF) (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>)) pulled in $436.9 million of new money last month. The ETF holds approximately 300 securities that combine bond characteristics, such as a fixed stream of income and are senior to common stocks, with common stock characteristics, such as ownership in the company and trading on an exchange. PFF, which has a 0.47 percent expense ratio, sports a 5.8 percent 30-day SEC yield,&rdquo; added S&amp;P Capital IQ.

BKLN

Guess What? Investors Still Love Bond ETFs

Income investors are loving life in 2016. The Federal Reserve has yet to raise interest rates, and with each passing month without a rate hike, it appears increasingly likely that the most rate hikes coming this year will be two.

	Predictably, this scenario has been a boon for plenty of income-generating asset classes and sectors, including preferred stocks and exchange-traded funds. A preferred stock is a type of security that offers characteristics of both bonds and equities. The <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5837534/preferred-stock-etfs-provide-potential-fed-clues">primary source</a> of allure with preferreds is yield, although preferred shareholders are higher on the totem pole in the event of issuer bankruptcy or default than are common equity holders.
<h3>
	A Few Preferred Names</h3>

	The iShares S&amp;P US Pref Stock Idx Fnd (ETF) (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>), which tracks the S&amp;P U.S. Preferred Stock Index, is among the preferred ETFs benefiting from the Fed&#39;s reluctance to raise rates. Year-to-date, PFF has added $738.3 million in new assets. With a trailing 12-month yield of 5.8 percent, it is easy to see why <a href="http://www.benzinga.com/news/16/02/6191280/hiding-out-with-a-preferred-stock-etf">investors are fond of PFF</a>.

	<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/news/16/02/6191280/hiding-out-with-a-preferred-stock-etf">Hiding Out With A Preferred Stock ETF</a></bzrelatedlink>

	Preferred stocks and ETFs have another advantage: Even if the issuer cuts or suspends the dividend on its common stock, it essentially must continuing pay preferred dividends.

	&ldquo;Unlike common stock, most preferred dividends are cumulative, meaning dividend payments accrue even if not paid when scheduled. If a firm suspends paying dividends, it must pay preferred shareholders in full before paying any dividends to common shareholders,&rdquo; said S&amp;P Dow Jones Indices <a href="http://www.indexologyblog.com/2016/04/29/preferences-of-preferred-stock/">in a recent note</a>.

	PFF has an international counterpart, which has benefited from low and negative interest rates throughout the ex-U.S. developed world. The iShares International Preferred Stock ETF (NYSE: <a class="ticker" href="/stock/ipff#NYSE">IPFF</a>), which follows the S&amp;P International Preferred Stock Index, has added nearly $77 million in fresh capital this year. That is an especially tally when considering IPFF now has $108.7 million in assets under management.

	IPFF, which yields 6.1 percent on a trailing 12-month basis, devotes a combined 90.5 percent of its weight to Canada and U.K. preferreds. IPFF is more exposed to the impact of oil prices on preferreds than is PFF.

	&ldquo;The S&amp;P International Preferred Stock Index has over 20 percent exposure to companies in the energy sector; meanwhile, the S&amp;P U.S. Preferred Stock Index has no exposure. As a result, the U.S. index has significantly outperformed its international counterpart. Since August 2014, the S&amp;P U.S. Preferred Stock Index was up 10.0 percent, while the S&amp;P International Preferred Stock Index was down -27.5 percent as of March 2016,&rdquo; added S&amp;P Dow Jones Indices.

IPFF

Why It's A Good Idea To Prefer Preferred ETFs

Less than two months removed from the Federal Reserve&#39;s first interest rate hike in nearly a decade, volatile global equity markets have renewed investors&#39; enthusiasm for rate-sensitive asset classes.
That theme explains why five of this year&#39;s top 10 asset-gathering exchange-traded funds are fixed income funds and one of the other five is the Utilities SPDR (ETF) (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>). Although investors have pulled $62 million from the iShares S&amp;P U.S. Pref Stock Idx Fnd (ETF) (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>) since the start of the year, the time could be right for investors to consider PFF and rival preferred stock ETFs.
Sensitivity to rising rates comes by way of a bond&#39;s duration; the longer the duration, the more sensitive it is to fluctuations in interest rates.
<h3>Preferred Stocks</h3>
A preferred stock is a type of security that offers characteristics of both bonds and equities. The <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5837534/preferred-stock-etfs-provide-potential-fed-clues">primary source</a> of allure with preferreds is yield, though preferred shareholders are higher on the totem pole in the event of issuer bankruptcy or default than are common equity holders. In the case of PFF, the ETF is undoubtedly tempting with a trailing 12-month yield of almost 5.8 percent.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/02/6191212/an-active-etf-with-an-all-star-pedigree">An Active ETF With An All-Star Pedigree</a></bzrelatedlink>
As is the case with bonds, preferreds are sold at par value, or offer a fixed or floating rate of income, so prices fluctuate with interest rates, wrote William Scapell, director of fixed income and preferred securities portfolio manager at Cohen &amp; Steers, for <a href="http://www.investmentnews.com/article/20150524/REG/305249994/preferred-securities-seen-as-attractive">InvestmentNews</a>.
&ldquo;Most preferred issues tend to be banks and other financial companies. Following massive regulatory changes in the financial sector, the U.S. banking sector is considerably less leveraged and arguably safer than it was pre-crisis. So, while more boring than they once were, U.S. financials may be well positioned to potentially provide a dividend stream,&rdquo; said BlackRock Global Chief Investment Strategist Russ Koesterich <a href="https://www.blackrockblog.com/2016/01/29/ride-volatility/">in a recent note</a>.
<h3>PFF</h3>
PFF certainly fits the bill as an avenue for skirting volatility. The ETF&#39;s beta is just 0.17 with a three-year standard deviation of just under 4.1 percent. PFF, which tracks the S&amp;P U.S. Preferred Stock Index, is home to 281 preferred issues.
Preferred stock ETFs are among the assets that can&#39;t be counted on&ldquo;to produce massive, double-digit returns. Investors looking for more aggressive profits probably need to test their nerves and try to time the market bottom. For the rest, a better approach may be seeking more modest returns with lower volatility, via a focus on portfolio construction, risk exposures and less traditional asset classes,&rdquo; added Koesterich.
Image Credit: <a href="https://pixabay.com/en/landscape-grassland-field-meadow-768547/">Public Domain</a>

Intraday Update

Hiding Out With A Preferred Stock ETF

While listed as stocks, &ldquo;preferred&rdquo; shares are a hybrid between stocks and bonds. They provide a fixed dividend that takes priority over payouts on common stock. At the same time, they are highly sensitive to interest rates like bonds, i.e., as rates rise, prices generally fall, and vice versa. As such, the conventional thinking approaching the likely Fed rate hike in mid-December was that preferred stocks would suffer along with other higher yielding instruments that serve as competition for low-rate fixed income securities. Indeed, in the days leading up to the Fed meeting, preferred stocks sold off sharply as an impending rate hike became more apparent.

	Then a funny thing happened. After the rate hike occurred, preferred stocks began to rally. And the development has even gone somewhat beyond the &ldquo;sell the rumor, buy the news&rdquo; stage at this point. Judging by at least one popular preferred stock ETF, the PowerShares Fin. Preferred&nbsp;Port. (ETF) (NYSEARCA:PGF), preferred stocks have actually moved to new 52-week highs. And bear in mind that this does not even adjust for PGF&rsquo;s hefty 5.63% yield.

	<img alt="" src="https://40.media.tumblr.com/3fa887f93070ae6e66a32a75139fad6c/tumblr_inline_o03rdkWZiW1sq14jh_500.jpg" style="width: 500px; height: 362px;" />

	So what is the deal here? Why is this scenario not unfolding along conventional wisdom? Well, for one, financial companies do stand to benefit in some ways from rising interest rates. Therefore, perhaps that fact is countering the ill-effects of the rate hike on the competitiveness of preferred stocks&rsquo; yields. Further, while the Fed did hike the short-term Fed Funds rate, the jury is still clearly out on a rising longer-term rate environment. If longer-term rates remain subdued, the attractiveness of securities like preferred stocks could persist.

	Regardless of the underlying fundamental &ldquo;reason&rdquo; that preferred stocks have jumped in the wake of the Fed rate hike, here is the real reason as we see it: it was the least obvious, most counter-intuitive reaction. As the old market bromide goes, &ldquo;if it&rsquo;s obvious, it&rsquo;s obviously wrong.&rdquo; And as unsatisfying an explanation as that may be for most people, it is an utterly reasonable and adequate explanation to us.

	This touches on the very core of the investment process, which is determined by human natural reactions. And, at least in the investment world, human nature will invariably dictate that one do the wrong thing at the wrong time. So while we don&rsquo;t know if preferred stocks will continue to do well going forward, we do know one thing.

	In investing, when faced with going the obvious route or the counter-intuitive route, counter-intuitive is the &ldquo;preferred&rdquo; way for us. 
	________

	<a href="http://jlfmi.tumblr.com/About">More</a> from Dana Lyons, JLFMI and My401kPro.

	The commentary included in this blog is provided for informational purposes only. It does not constitute a recommendation to invest in any specific investment product or service. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.

Education

PowerShares Exchange Traded Fund Financial Preferred Portfolio

Lyons: Counter-Intuitive Investing Is The 'Preferred' Way

As investors digest the fact that the Federal Reserve is increasingly determined to raise interest rates following its December meeting, a plethora of rate-sensitive asset classes, sectors and exchange-traded funds are likely to come under intense scrutiny.
	Just look at last week&#39;s repudiation of utilities stocks and ETFs. Similar treatment could extend to real estate stocks and ETFs, as well as master limited partnerships, long duration bonds and other favored areas of income generation.
 The same probably holds true <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5967263/for-etf-investors-its-all-about-yellen">for preferred stocks and ETFs</a> such as the iShares S&amp;P US Pref Stock Idx Fnd (ETF) (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>).
<h3>Maybe Don't Ditch...</h3>
However, income investors might not want to be too hasty in ditching PFF and rival preferred ETFs, even as interest rates climb.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5966979/come-together-low-volatility-meets-equal-weight-in-these-etfs">Come Together: Low Volatility Meets Equal-Weight In These ETFs</a></bzrelatedlink>
&ldquo;While it is true that preferred stocks may see price declines as traditional long-term bonds would, the losses may be more than offset by the potential yield. Additionally, because we expect the rate rises to be gradual, we wouldn&rsquo;t expect to see big downward spikes in preferred prices. Preferred stocks may also be attractive due to the fact that they&rsquo;re issued mainly by financial companies, like banks. That&rsquo;s because banks have historically tended to do well in rising rate environments, as they can benefit from making loans at higher interest rates,&rdquo; according to a recent blog post <a href="https://www.blackrockblog.com/2015/11/04/case-for-preferred-stocks/">by BlackRock</a>, PFF&#39;s issuer.
<h3>Income Investors And Preferred Stocks</h3>
Income investors embraced preferred stocks, in large part, because of high yields, but as the spike in Treasury yields earlier this year and in 2013 taught investors, high-yielding assets are <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5725602/just-as-it-sort-of-perked-up-a-dividend-etf-lost-more-money">vulnerable to rising rates</a>.
Of course, sensitivity to rising rates comes by way of a bond&#39;s duration; the longer the duration, the more sensitive it is to fluctuations in interest rates. 
A preferred stock is a type of security that offers characteristics of both bonds and equities. The <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5837534/preferred-stock-etfs-provide-potential-fed-clues">primary source</a> of allure with preferreds is yield, though preferred shareholders are higher on the totem pole in the event of issuer bankruptcy or default than are common equity holders. In the case of PFF, the ETF is undoubtedly tempting with a trailing 12-month yield of almost 6.2 percent.
&ldquo;Because preferred stocks have a fixed dividend and may not fluctuate the way common stocks do when the market changes, they can potentially reduce the overall volatility of an equity or high yield portfolio. Keep in mind, however, that preferred stocks are more volatile than traditional fixed income and can carry more risk when financial sectors are under pressure,&rdquo; added BlackRock.
Although investors may be fretting about higher interest rates, that mentality is not reflected in their treatment of PFF; the ETF has added nearly $526 million in new assets since the start of the fourth quarter. 
Image Credit: <a href="https://pixabay.com/en/mark-marker-hand-leave-516277/">Public Domain</a>

Don't Abandon Preferred ETFs

One way or the other, the Federal Reserve will be making a decision on interest rates on Thursday. Either benchmark U.S. interest rates are going to continue hovering near or zero or, as some market participants expect, those rates will rise by 25 basis points.

	Examining recent flows data for select rate-sensitive exchange traded funds is a task unlikely to give investors a clear idea regarding what the Fed is going to decide. For example, the high-yields and bond-like properties of preferred stocks would seemingly make that asset class vulnerable to higher interest rates, but investors have recently been pouring money into the iShares U.S. Preferred Stock ETF (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>) and the PowerShares Preferred Portfolio (NYSE: <a class="ticker" href="/stock/pgx#NYSE">PGX</a>), among&nbsp;<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5837534/preferred-stock-etfs-provide-potential-fed-clues">other preferred ETFs</a>.

	Conversely, investors have been far less sanguine about utilities ETFs. In fact, they have been downright skittish as highlighted by the $549.3 million in month-to-date departures from the Utilities Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>), the largest utilities ETF.
<h3>
	Why This Makes Sense</h3>

	Investors&#39; angst as it pertains to the utilities ahead of potentially hawkish moves by the Fed makes sense. In the case of XLU, it is the most negatively correlated to interest rates of the nine sector SPDR ETFs. History confirms the laggard status of utilities stocks following interest rate increases.

	&quot;Telecom was the worst or second worst performing sector in terms of average cumulative returns in 6 out of the 12 months following Fed liftoff,&rdquo; said Bank of America in a&nbsp;<a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/09/5834437/dont-mess-with-these-etfs-if-interest-rates-rise#ixzz3lxABw4Eu">note out last week</a>. The bank added &ldquo;utilities were lackluster throughout the 12 months after Fed liftoff.&rdquo;

	Investors&#39; September disdain for utilities ETFs has not been limited to XLU. The Vanguard Utilities ETF (NYSE: <a class="ticker" href="/stock/vpu#NYSE">VPU</a>) and the iShares U.S. Utilities ETF (NYSE: <a class="ticker" href="/stock/idu#NYSE">IDU</a>) have lost $30 million combined this month.

	Some traders are even outright betting against utilities ETFs. Short interest in XLU was recently as high as 36 percent of shares outstanding, according to AltaVista Research, the&nbsp;<a href="http://www.etfresearchcenter.com/archives/Sector_SPDR_Analyzer_090115_ERC.pdf">third-highest total</a> among the nine SPDRs.

	Interestingly, utilities stocks are inexpensive relative to the S&amp;P 500, a rarity for the ultra-defensive sector that usually forces investors to pay-up for the luxury of that defensive posture. XLU&#39;s estimated 2015 price-to-earnings ratio is 15.5 compared to 16.7 for the S&amp;P 500, according to AltaVista.

	&ldquo;Environmental regulations and distributed generation represent dual threats to profitability-- witness the declining trend in Return on Equity and margins over the past few years, which may appear small but are forecast to result in less than 1% earnings growth between 2010-15E. That said, the P/E ratio has come off its highs from earlier this year, so the sector could get another look from value and income value investors, especially if the Fed delays raising,&rdquo; said AltaVista of XLU.

	The research firm has a Neutral rating on XLU.

Sector ETFs

Short Ideas

iShares Trust Dow Jones US Utilities Sector Index Fund

Ahead Of The Fed, Investors Ditch Utilities ETFs

Income investors embraced preferred stocks, in large part, because of high yields, but as the spike in Treasury yields earlier this year and in 2013 taught investors, high-yielding assets are <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5725602/just-as-it-sort-of-perked-up-a-dividend-etf-lost-more-money">vulnerable to rising rates</a>.

	Preferred stocks are often viewed as hybrid securities, displaying both bond- and equity-like traits, and reside higher on the totem pole than do common stocks in terms of investor claims in the event of issuer default. As is the case with bonds, preferreds are sold at par value, or offer a fixed or floating rate of income, so prices fluctuate with interest rates, wrote William Scapell, director of fixed income and preferred securities portfolio manager at Cohen &amp; Steers, for <a href="http://www.investmentnews.com/article/20150524/REG/305249994/preferred-securities-seen-as-attractive" target="_blank">InvestmentNews</a>.
<h3>
	ETFs To Play</h3>

	Legacy preferred ETFs, including the iShares U.S. Preferred Stock ETF (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>) and the PowerShares Preferred Portfolio (NYSE: <a class="ticker" href="/stock/pgx#NYSE">PGX</a>), sport sizable enough yields that these funds qualify as &ldquo;high-yield&rdquo; instruments, in turn making these ETFs and others like them vulnerable to higher interest rates. PFF and PGX carry 30-day SEC yields of 5.35 percent and 5.94 percent, respectively.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5832788/these-sector-etfs-could-shine-after-a-rate-hike">These Sector ETFs Could Rise After A Rate Hike</a>

	That is to say if investors were betting that the Federal Reserve will announce higher interest rates following the conclusion of its two-day meeting Thursday, preferred stocks and ETFs <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/09/5834437/dont-mess-with-these-etfs-if-interest-rates-rise">would not be the place</a> investors would be running to. However, that is what they are doing.

	Since the start of the third quarter, PFF has added just over $350 million in new assets. PGX has seen $49.6 million of inflows over the past 90 days, placing it thirteenth among all PowerShares ETFs, <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/tools/flow-trend-tracker">according to issuer data</a>.

	The fourth-place ETF on that PowerShares list is the PowerShares Variable Rate Preferred Portfolio Fund (NYSE: <a class="ticker" href="/stock/vrp#NYSE">VRP</a>), which makes sense because VRP is the one preferred ETF <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/08/5782521/the-preferred-preferred-etf-for-fed-shenanigans#ixzz3llHVF2RN">designed specifically with </a>higher interest rates in mind.

	&ldquo;Debt securities with floating or variable rates may help protect investors from a rising rate environment. Even if maturities extend beyond a call date, interest rate risk can be much lower and is limited to the time until the next rate reset,&rdquo; according to a&nbsp;<a href="http://www.blog.invesco.us.com/extension-risk-when-interest-rates-rise-fixed-income-investing">new research note</a> from PowerShares.

	VRP, which has a 30-day SEC yield of 5.16 percent, has added $120.4 million in new asset over the past three months. With that yield, VRP is certainly in the high-yield conversation, so its recent burst of asset-gathering proficiency cements the notion that investors are embracing preferred ETFs at a time when it would appear risky to do so.

	Investors are also embracing actively managed preferred ETFs. In the current quarter, the First Trust Preferred Securities and Income ETF (NYSE: <a class="ticker" href="/stock/fpe#NYSE">FPE</a>) has taken in $86.4 million of its $349.6 million in assets under management.

Preferred Stock ETFs Provide Potential Fed Clues

With a historically low interest rate environment for the last five years, ETFs holding preferred stock have been a favorable destination for yield-seeking income investors.
<h3>
	Overview: Preferred Stock</h3>

	A preferred stock is a type of security that offers characteristics of both bonds and equities. Preferred shares fall between common stock and bonds, in that they have an income aspect to them and can also provide capital appreciation.

	In terms of hierarchy, preferred stocks are below corporate bonds and above common stocks. In layman&#39;s terms, the holder of preferred stock would be paid before the holder of common stock, but after corporate bondholders.

	With the Fed looking to raise rates sometime in 2015, now would be a good time to reassess preferred stock investments. As interest rates rise, investors may start to roll out of preferred stock ETFs in search of yield in other asset classes.

	<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/04/5384702/lpl-financial-economist-its-now-very-difficult-for-the-f">LPL Financial Economist: It&#39;s Now &quot;Very Difficult&quot; For The Fed To Raise Rates In June</a></bzrelatedlink>
<h3>
	PowerShares Variable Rate Preferred Portfolio</h3>

	A way for investors to stay in preferred stock ETFs during an environment of rising interest rates is the PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/vrp#NYSE">VRP</a>). The 10-month old ETF has the characteristics of a traditional preferred stock ETF; however, it incorporates &quot;hybrid securities,&quot; which have a floating rate, allowing it to account for changing interest rates.

	As the Fed raises rates, the interest paid by hybrid securities will also increase, a phenomenon often referred to as floating rates.

	VRP is composed of 91 preferred stocks that cover six sectors. The financials make up the majority of the portfolio at 87 percent, with energy coming in at 5 percent. The top holdings include:
<ul>
<li>
		Wachovia Capital Trust III at 3.9 percent</li>
<li>
		Citigroup Capital XIII making up 3.7 percent</li>
<li>
		GMAC Capital Trust I Fixed Rate Floating Rate Trust (NYSE: ALLY-A) coming in at 3.3 percent</li>
</ul>

	VRP has a 30-day SEC yield of 4.82 percent and a yield to maturity of 4.47 percent. The ETF has an expense ratio of 0.50 percent.

	<bzrelatedink>Related Link: <a href="http://www.benzinga.com/pressreleases/15/04/b5388613/colony-capital-inc-announces-preferred-stock-offering">Colony Capital Inc. Announces Preferred Stock Offering</a></bzrelatedink>
<h3>
	iShares U.S. Preferred Stock ETF</h3>

	For comparison, the largest preferred stock ETF in the market is the iShares S&amp;P US Pref Stock Idx Fnd (ETF) (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>), which gives investors exposure to a basket U.S. preferred stocks. The ETF is made up of 312 holdings across 15 sectors, with banks at 38 percent and diversified financials at 16 percent being the most heavily weighted sectors.

	The top individual holdings include:
<ul>
<li>
		HSBC Holdings plc (ADR) (NYSE: <a class="ticker" href="/stock/hsbc#NYSE">HSBC</a>) at 2.4 percent</li>
<li>
		GMAC Capital Trust I making up 1.7 percent</li>
<li>
		Barclays PLC (ADR) (NYSE: <a class="ticker" href="/stock/bcs#NYSE">BCS</a>) totaling 1.7 percent as well</li>
</ul>

	PFF has a 30-day SEC yield of 5.48 and an expense ratio of 0.47 percent.

	Image Credit: <a href="http://pixabay.com/en/statistics-transparency-company-706381/">Public Domain</a>

ALLY-A

HSBC

Alternative To Preferred Stock ETFs

February was a volatile month for interest rates and asset classes traditionally linked to machinations in the bond markets. The CBOE Interest Rate 10 Year Note (INDEX: TNX) spiked from a low of 1.67 percent to a high of 2.00 percent last month amid a strong bid for stocks.

	This spike higher in rates led to a selloff in the iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE: <a class="ticker" href="/stock/tlt#NYSE">TLT</a>), Vanguard REIT Index Fund (NYSE: <a class="ticker" href="/stock/vnq#NYSE">VNQ</a>) and even the Utility Select Sector SPDR ETF (Utilities SPDR (ETF)) (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>). However, the asset class that shrugged off this macro-economic headwind and continued to new highs is preferred stocks.
<h3>
	What Are Preferred Stocks?</h3>

	Preferred stocks are known as a hybrid instrument that carry qualities of both equity and debt securities. These shares are higher on the capital structure than common stock owners and typically pay a hefty yield, which is where their sensitivity to interest rates is upheld.
<h3>
	iShares U.S. Preferred Stock ETF</h3>

	The iShares S&amp;P US Pref Stock Idx Fnd (ETF) (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>) is the largest ETF in this space with over $12.7 billion in total assets. PFF invests in a diversified basket of over 300 preferred stocks, which are primarily focused in the financial, banking and real estate sectors.
<div id="preview-wrapper" style="height: 219px;">
<div id="file-preview">
		<a href="httpS://www.benzinga.com/imce?app=nomatter%7Cimceload@imceInline.load#" onclick="imce.send('pff_1.png'); return false;" title="Insert file"><img alt="pff_1.png" height="284" src="httpS://www.benzinga.com/files/u79448/pff_1.png" width="460" /></a></div>
</div>



	&nbsp;

	PFF has gained 11 percent in total return over the last year and just recently touched new 52-week highs. This ETF also sports a 30-day SEC yield of 5.61 percent and dividends are paid monthly to shareholders.
<h3>
	PowerShares Preferred Portfolio</h3>

	Another strong contender in this category is the PowerShares Preferred Portfolio(ETF) (NYSE: <a class="ticker" href="/stock/pgx#NYSE">PGX</a>). This ETF focuses on a more concentrated mix of 213 preferred stocks, of which 88 percent are financial-based companies. The current yield on PGX is 5.90 percent.

	PFF carries an expense ratio of 0.47 percent, while PGX is slightly higher at 0.50 percent.

	<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/pressreleases/15/03/b5294833/amsurg-declares-quarterly-preferred-stock-dividend">AmSurg Declares Quarterly Preferred Stock Dividend</a></bzrelatedlink>
<h3>
	What Makes Preferred Stock ETFs Unique</h3>

	One of the distinct qualities of preferred stock ETFs is that their returns don&rsquo;t mirror a traditional equity or bond index. PFF, for example, has a beta to the S&amp;P 500 Index (INDEX: SPX) of just 0.24. This may be an attractive quality for income-seekers looking to diversify their portfolio in non-correlated asset classes.

	Disclosure: At the time this article was written, David Fabian and clients of FMD Capital Management owned PFF.

iShares Trust Barclays 20+ Year Treasury Bond Fund

Preferred Stock ETFs Press Higher, Ignore Interest Rate Spike

Income investors are well aware of the benefits of using preferred stocks in their portfolio to generate dividends and capital appreciation. These hybrid instruments have characteristics of both equity and debt in that they pay a fixed coupon but are higher on the capital structure than common stock holders.

	The tailwind from the stock and bond markets in 2014 has been a perfect recipe for preferred stocks to shine. A number of ETFs have taken advantage of this environment.

	The largest fund in this space is the iShares U.S. Preferred Stock ETF (NYSE: <a class="ticker" href="/stock/pff#NYSE">PFF</a>), which has over $11 billion in total assets. This ETF holds 330 preferred securities that are primarily weighted towards large banking and financial institutions. Other smaller sectors that are included in PFF include real estate, utilities and telecommunication companies.

	Related Link: <bzrelatedlink><a href="http://www.benzinga.com/etfs/sector-etfs/14/12/5101709/the-best-bond-etf-of-2014">The Best Bond ETF Of 2014</a></bzrelatedlink>

	With just a couple trading days left in the year, PFF has achieved a total return of nearly 14 percent (with dividends included). The current 30-day SEC yield of this ETF is 5.60 percent and dividends are paid monthly to shareholders.
<div id="preview-wrapper">
<div id="file-preview">
		<a href="https://www.benzinga.com/imce?app=nomatter%7Cimceload%40imceInline.load#" title=""><img alt="pff_0.png" height="284" src="https://www.benzinga.com/files/u79448/pff_0.png" width="460" /></a></div>

		While those returns are excellent, the PowerShares Financial Preferred Portfolio (NYSE: <a class="ticker" href="/stock/pgf#NYSE">PGF</a>) has been one of the strongest ETFs in this group with a gain of over 7 percent in 2014. PGF has over $1.4 billion invested in a diversified basket of 86 holdings from a variety of financial industries. This ETF also has a slightly higher yield of 5.93 percent as well.

		Lastly, the Market Vectors ETF Trust (NYSE: <a class="ticker" href="/stock/pfxf#NYSE">PFXF</a>) has capped off 2014 with powerful momentum as well. This unique ETF takes a different spin on the preferred space by excluding financial companies from its index. The end result is a far different basket of securities that focus heavily on REITs, electric utilities and telecom companies.

		PFXF has a yield of 5.92 percent, expense ratio of 0.40 percent and over $200 million in total assets.

		The diversity amongst this group of ETFs makes for the ability to select a broad index or specific niche in this alternative income segment in order to hone in on the best strategy to fit your needs.

		Disclosure: At the time of this writing, the author had a position in PFF.
</div>

PFXF

3 Preferred Stock ETFs Cap Off Strong Year

iShares Trust iShares Preferred and Income Securities ETF

Comments

iShares Preferred and Income Securities ETF

Actualités

Dernières nouvelles pour iShares Preferred and Income Securities ETF (NASDAQ:PFF)

Notizie

PARTENAIRE / CONTRIBUTEUR

BENZINGA MONDIAL