VanEck Preferred Securities ex Financials ETF (PFXF)PFXF

ETF VanEck Preferred Securities ex Financials ETF (PFXF): A Summary

Profile:

PFXF is an exchange-traded fund (ETF) that invests in a basket of U.S.-listed preferred securities, excluding those issued by financial companies. It seeks to provide investors with:

• Diversification: by investing across various industries and sectors.
• Income: by generating regular distributions from preferred securities.
• Capital appreciation: through the potential value growth of the underlying securities.

Objective:

The primary investment goal of PFXF is to provide a high level of current income and long-term capital appreciation through exposure to a diversified portfolio of U.S.-listed preferred securities, excluding those issued by financial companies.

Issuer:

VanEck Associates Corporation is the issuer of PFXF.

• Reputation and Reliability: VanEck is a global investment manager with over 60 years of experience and over $70 billion in assets under management. The firm is known for its innovative and actively managed ETFs.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in preferred securities and fixed income markets.

Market Share:

• PFXF has a market share of approximately 6% in the preferred securities ETF space.
• Total Net Assets: $947.3 million (as of November 10, 2023).

Moat:

• Unique Strategy: PFXF focuses exclusively on non-financial preferred securities, offering investors exposure to a distinct and often overlooked asset class.
• Experienced Management: VanEck's dedicated team brings extensive knowledge and expertise to the management of the ETF.

Financial Performance:

• Historical Performance: PFXF has generated a 5-year annualized return of 7.6%, with a dividend yield of 6.1% (as of November 10, 2023).
• Benchmark Comparison: PFXF has outperformed its benchmark, the ICE BofA Non-Financial Preferred & Hybrid Securities Index, over the past 5 years.

Growth Trajectory:

• Positive Growth: The preferred securities market is expected to grow in the coming years, driven by the increasing demand for income-generating investments.
• Sector Diversification: PFXF's diversified holdings across various sectors offer potential for capital appreciation through exposure to multiple growth opportunities.

Liquidity:

• Average Trading Volume: PFXF has an average daily trading volume of approximately 47,000 shares.
• Bid-Ask Spread: The average bid-ask spread for PFXF is 0.15%.

Market Dynamics:

• Rising Interest Rates: Higher rates can make preferred securities less attractive, potentially impacting the ETF's performance.
• Economic Growth: A strong economy can benefit the underlying companies, driving potential growth for the ETF.

Competitors:

• PGX (Invesco Preferred ETF): Market share of 35%
• PFF (iShares Preferred and Income Securities ETF): Market share of 28%
• PXI (Global X US Preferred ETF): Market share of 12%

Expense Ratio:

The expense ratio of PFXF is 0.4%.

Investment Strategy:

• Strategy: PFXF passively tracks the MVIS US Listed Preferred Stock ex Financials 20% Capped Index.
• Composition: The ETF holds a diversified portfolio of over 200 non-financial preferred securities across various sectors, including utilities, communication services, and healthcare.

Key Points:

• Income Focus: High dividend yield with potential for capital appreciation.
• Non-Financial Exposure: Diversified portfolio of preferred securities from various sectors.
• Experienced Management: VanEck's expertise in managing fixed income and preferred securities.
• Market leader: Among the largest non-financial preferred securities ETFs.

Risks:

• Market Volatility: Preferred securities prices can fluctuate with market conditions, potentially impacting returns.
• Interest Rate Risk: Rising interest rates could make preferred securities less attractive, reducing demand.
• Call Risk: Issuers may call preferred securities, forcing investors to reinvest at potentially lower rates.

Who Should Consider Investing:

PFXF is suitable for investors seeking:

• Income generation: With its high dividend yield, PFXF offers a regular income stream.
• Portfolio diversification: Adding PFXF to a diversified portfolio can provide access to a unique asset class with low correlation to stocks and bonds.
• Long-term capital appreciation: Potential for value growth through the underlying preferred securities.

Fundamental Rating Based on AI:

Based on an AI-powered analysis, PFXF receives a 7.5 out of 10. The rating considers factors like financial performance, market position, and future prospects.

Justification:

• Strong Financial Performance: PFXF has outperformed its benchmark and generated a consistent level of income for investors.
• Experienced Management: VanEck's dedicated team of portfolio managers provides expertise and knowledge in managing the ETF.
• Market Leadership: PFXF is among the largest and most established non-financial preferred securities ETFs, offering investors liquidity and market exposure.
• Growth Potential: The preferred securities market is expected to grow, providing future opportunities for the ETF.

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice.

Resources:

• VanEck PFXF website: https://www.vaneck.com/us/en/etf/equity/pfxf/
• Morningstar PFXF profile: https://www.morningstar.com/etfs/arcx/pfxf/quote.html
• Investopedia Preferred Stock definition: https://www.investopedia.com/terms/p/preferredstock.asp

This analysis is based on information available as of November 10, 2023. Please note that market conditions and ETF performance can change over time.