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Why Investors Are Moving Toward Preferred Stock ETFs

Why Investors Are Moving Toward Preferred Stock ETFs February 1, 2021 Preferred stocks and related exchange traded funds are, well, preferred destinations for income seekers in today’s low yield climate. The Global X Variable Rate Preferred ETF (PFFV), which tracks the ICE U.S. Variable Rate Preferred Securities Index, is an optimal blend of above-average yields and short duration. Preferred stocks are a type of hybrid security that shows bond- and equity-like characteristics. The shares are issued by financial institutions, utilities, and telecom companies, among others. Within the securities hierarchy, preferreds are senior to common stocks but junior to corporate bonds. Additionally, preferred stocks issue dividends on a regular basis, but investors don’t usually enjoy capital appreciation on par with common shares.

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