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PFFA is an actively managed preferred stock ETF that focuses on preferred equity listed in the US and utilizes a variety of active management strategies. Specifically, the portfolio manager analyzes companies based on fundamentals while generally eliminating exposure to callable securities. A distinguishing characteristic of PFFA is that it uses margin to modestly leverage the portfolio, with a target leverage of 15-25% and a cap of 33% of fund assets (an effective maximum leverage ratio of 1.25x). The fund may engage in active and frequent trading of portfolio securities, at its discretion, to meet its investment objectives.
Is PFFA's expense ratio expensive, average, or a steal for its category?
Pro reveals the verdict on a 5-tier spectrum calibrated against ICI 2025 industry averages, with strategy-aware bands so the comparison is meaningful.
2 investment grade dividend stocks have sold off sharply even as their earnings climbed, but only one of them is a real bargain. One "deep-value" yield looks great on paper, but a new $2 trillion competitor and a quiet build-up of debt tell a different story. The other has been dumped for reasons that look worse than they are, which leaves a 5%+ yield backed by contracted cash flows.
Virtus InfraCap U.S. Preferred Stock ETF (PFFA) offers a 10.7% yield, outperforming its index and maintaining monthly payouts despite recent rate hikes. PFFA leverages active management, sector tilts, and an options overlay to enhance income and capitalize on preferred market inefficiencies. Leverage (25% of NAV) and sector concentration drive both yield and risk; rising rates increase funding costs, but the income spread remains attractive.
Virtus InfraCap US Preferred Stock ETF offers a high ~10% yield but faces notable interest rate and NAV erosion risks. PFFA's active management and leverage have enabled relative outperformance versus passive peers, yet absolute returns remain moderate at times of rising rates. A meaningful portion of distributions is funded by realized gains, not just net investment income, raising sustainability concerns if rates rise further.
Income investors now have a much wider choice of attractive yields than they have had for years. Risks in the system are higher too, but that has pushed prices to levels that favor patient buyers. Two high-quality income vehicles have sold off recently, and the drop looks more like repricing than real trouble.
Many investors are growing increasingly complacent. I detail three very big mistakes that I am seeing a lot of investors make right now. I discuss why bonds may be riskier than they seem, historically cheap-looking high-yield securities may not be nearly as undervalued as they seem, and many investors are overpaying for outperformers.