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New ETF Option For Income Investors

This article is more than 10 years old.

According to ETF Channel, today Global X Funds launched the Global X SuperIncome Preferred ETF (SPFF) on NYSE Arca. SPFF is designed to track fifty of the highest yielding preferred securities in North America. Approximately 74% of the ETF is invested in Financials, 8.4% in Insurance, followed by Real Estate, Energy, Industrials, Basic Materials and Telecommunications.

This offering joins other preferred ETFs, including the SPDR Wells Fargo Preferred ETF (PSK) which seeks to replicate as closely as possible, before fees and expenses, the total return of the Wells Fargo Hybrid and Preferred Securities Aggregate Index, a modified market cap weighted index designed to measure the performance of non-convertible preferred stock and securities that are functionally equivalent to preferred stock. PSK has a current yield of 6.74% and as of quarter end, posted a YTD return of 10.06%.

Another preferred ETF is the PowerShares Preferred Portfolio (PGX), which is based on The BofA Merrill Lynch Core Plus Fixed Rate Preferred Securities Index. The Fund will normally invest at least 80% of its total assets in fixed rate U.S. dollar-denominated preferred securities that comprise the Index, which tracks the performance of fixed rate U.S. dollar denominated preferred securities issued in the U.S. domestic market. This ETF has a distribution yield of 6.53% and as of quarter-end returned 9.76%. PowerShares also offers the PowerShares Fiancial Preferred Portfolio (PGF) with a slightly lower distribution yield of 6.28%, but a year-to-date return of 15.46%.

Rounding out the preferred ETFs is iShares with the US Preferred Stock Index (PFF) which follows an index that measures performance of a group of preferred stocks on US exchanges with a market cap over $100 million. As of June 30, PFF had a year to date return of 12.14% and a 12 month yield of 5.88%.