VanEck Preferred Securities ex Financials ETF (PFXF)

ETF VanEck Preferred Securities ex Financials ETF (PPH) Overview

Profile:

VanEck Preferred Securities ex Financials ETF (PPH) seeks to provide a diversified portfolio of publicly traded U.S. preferred stock, primarily issued by non-financial companies. This ETF focuses on preferred securities with a strong credit quality and high liquidity.

Objective:

PPH aims to generate current income through preferred stock dividends and capital appreciation over the long term. It seeks to outperform the BofAML US Preferred Non-Financials Index (PFFD).

Issuer:

VanEck is a global investment manager with over 70 years of experience. They offer a diverse range of financial products and are known for their innovation and active management approach. The issuer has an established reputation for managing preferred stock ETFs.

Market Share:

As of November 2023, PPH has approximately 6% market share in the preferred securities ETF space within the US. This places them among the top players in this category.

Total Net Assets:

PPH has over $1 billion USD in assets under management as of November 2023.

Moat:

• Unique Focus: PPH's focus on non-financial preferred stocks differentiates it from competition and offers investors exposure to a diverse range of industries.
• Active Management: VanEck's active management approach allows them to select high-quality preferred stocks and adjust the portfolio based on market dynamics.
• Liquidity: PPH's large trading volume provides investors with easy entry and exit options.

Financial Performance:

PPH has historically outperformed its benchmark index PFFD. Since its inception (December 2015), PPH has achieved an average annual return of 5.9%, while PFFD averaged 4.5%. This demonstrates PPH's potential for generating strong returns for investors.

Growth Trajectory:

The preferred stock market is expected to experience continued growth due to the increasing popularity of these securities among corporations and investors seeking income generation. PPH's focus on non-financial companies and active management positions it well to capitalize on this growth.

Liquidity:

PPH has a high average daily trading volume of around 150,000 shares, making it a highly liquid ETF. This ensures easy entry and exit options for investors. Its bid-ask spread is also tight, indicating low trading costs.

Market Dynamics:

Factors affecting PPH's market include economic indicators like interest rates, preferred stock issuance trends, and the overall performance of the stock market.

Competitors:

PPH's main competition includes:

Expense Ratio:

PPH's expense ratio is 0.35% of assets, which includes management fees and operating costs. This is considered competitive compared to other preferred stock ETFs.

Investment Approach and Strategy:

PPH uses a benchmark-aware actively managed approach. This means they track the performance of the PFFD while selecting and weighting securities based on their internal research and market analysis. This approach aims to outperform the benchmark while maintaining a diversified and high-quality portfolio.

Key Points:

• Provides high income potential through preferred dividends.
• Focuses on a diversified portfolio of non-financial preferred stocks.
• Actively managed for enhanced performance.
• Highly liquid with competitive trading costs.
• Potentially benefits from the growing preferred stock market.

Risks:

• Interest Rate Risk: Interest rate changes may impact the value of preferred stocks.
• Market Risk: The overall stock market performance can affect preferred stock prices.
• Credit Risk: The creditworthiness of the companies issuing the preferred stocks could impact their value.

Who Should Consider Investing:

PPH is a suitable investment for those seeking income generation and moderate risk exposure. It is particularly appealing to individuals seeking an alternative to traditional fixed-income investments and investors aiming to diversify their income streams.

Fundamental Rating Based on AI:

Based on the combination of factors like historical performance, risk profile, future prospects, management quality, competition, and fees, an AI-based rating system assigns PPH a rating of 7.5 out of 10 for its fundamentals. This suggests a solid all-around ETF with the potential for generating positive returns for investors.

Resources & Disclaimers:

This analysis used the following sources to gather information:

• VanEck website: https://us.vaneck.com/etfs/equity/sph
• Investopedia: https://www.investopedia.com/etfs/best-preferred-stock-etfs-2020
• Morningstar: https://www.morningstar.com/etfs/ark/sph/overview

This information is provided for general knowledge and not as financial advice. It is crucial to consult a professional financial advisor for personalized investment recommendations. Past performance is not guarantee of future outcomes, and all investments carry risk.