By Michael Johnston:
Global X announced an addition to its lineup of income-oriented ETFs this week, debuting a fund that targets a basket of the highest yielding preferred stock issues in the U.S. and Canadian markets. The new SuperIncome Preferred ETF (SPFF - News) will seek to replicate the S&P Enhanced North American Preferred Stock Index, which includes approximately 50 preferred stock securities with this highest yield. SPFF joins a lineup of preferred stock ETFs that includes the recently launched ex-Financials Preferred Stock ETF (PFXF - News) from Van Eck, but will be the first to specifically target the highest yielding securities in this asset class.
Under The Hood
Like many preferred stock ETFs, SPFF will have a heavy tilt towards the financial sector. Financial issuers represent about 74% of the portfolio, with insurance companies (8%) and REITs (6%) also making up meaningful allocations. The largest individual allocations will be preferred stock of Credit Suisse, AIG, Aegon and Wells Fargo.
SPFF will make monthly distributions, and will charge an expense ratio of 0.58%. That falls within the range for existing products in the Preferred Stock ETFdb Category. “For investors seeking higher investment income, SPFF offers relatively efficient access to preferred stocks that could potentially provide greater yields,” said Bruno del Ama, chief executive officer of Global X Funds [see the SPFF fact sheet for more on the new ETF].
“Super Yield” ETFs
SPFF will join Global X’s SuperDividend ETF (SDIV - News), which has become a popular product with investors looking to access high yielding stocks. SDIV maintains a similar methodology, focusing on 100 of the stocks from around the world with the highest dividend yield. That ETF currently has a 30-day SEC yield of about 8% and a 12 month dividend yield in the same neighborhood.
The universe of preferred stock ETFs also continues to expand; With the addition of SPFF, there are now eight ETFs offering exposure to this asset class. The other options include:
- S&P US Preferred Stock Fund (PFF)
- PowerShares Preferred Portfolio (PGX)
- PowerShares Financial Preferred Portfolio (PGF)
- SPDR Wells Fargo Preferred Stock ETF (PSK)
- S&P International Preferred Stock Index Fund (IPFF)
- Canada Preferred ETF (CNPF)
- Market Vectors Preferred Ex Financials ETF (PFXF - News)
Disclosure: No positions at time of writing.
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- preferred stock