PFF vs PGF

PFFAiShares Preferred and Income Securities ETF

PGFCInvesco Financial Preferred ETF

In short

PFF Preferred stock is a clumsy market to shop one issue at a time. PFF, running since 2007, bundles roughly 500 US dollar preferreds and hybrids into a single heavily traded ticker and pays out monthly.

PGF Most preferred ETFs are accidentally bank-heavy. PGF is deliberately so: since 2006 it has held fixed-rate preferreds from U.S. financial institutions and little else, paying monthly, for 0.56% a year.

Stated mandate

PFF The fund seeks to track an index of U.S. dollar-denominated preferred and hybrid securities, providing exposure to preferred stock and subordinated debt with an income-oriented mandate.

PGF The fund provides financial-focused exposure to preferred securities and generally invests at least 90% of assets in fixed-rate U.S.-dollar preferred securities issued by financial institutions.

Why people hold it

• PFF One ticker buys roughly 500 US dollar preferreds and hybrids tracking the ICE Exchange-Listed Preferred & Hybrid Securities Index, a corner most investors can't assemble issue by issue.
• Distributions land monthly rather than quarterly, a steadier rhythm for anyone spending the income.
• A multi-billion-dollar fund that trades actively, so getting in and out is rarely the hard part.
• Live since 2007, through the financial crisis and several rate cycles, with the same income-oriented mandate from a large index shop.

• PGF A pure play, not a tilt: at least 90% of assets sit in fixed-rate U.S.-dollar preferreds issued by financial institutions, tracking an ICE financial-preferred index.invesco.com
• Trading since December 2006, through the banking crisis that hit its own corner of the market hardest. Income arrives monthly.
• Fixed-rate by charter, so coupons don't reset with short-term rates the way they do at floating-rate cousins VRP (0.50%) and PFFV (0.25%).
• Roughly 100 issues from large banks and insurers, and the fund changes hands in decent size on a normal day.

Worth knowing

• PFF 0.45% a year is the going rate in this niche (the peer median), but it's many times what broad stock index trackers like VT charge.
• Preferreds and subordinated debt are hybrids: they rank below an issuer's senior bonds, so this trades on credit and rate conditions more than on earnings growth.
• The mandate is US dollar issuers only, so there's no international preferred exposure here.

• PGF At 0.56%, above the category median. Broader preferred funds charge less: PFFD at 0.23%, PFF at 0.45%.
• One sector by design. A shock to banks and insurers lands on every holding at once, with no utility or industrial preferreds to cushion it.
• Fixed coupons mean long-rate sensitivity: when long-term yields rise, these prices fall. That is the trade you are making here.

Full PFF profile⁠

Full PGF profile⁠