Virtus ETF Solutions has partnered with Infrastructure Capital Advisors (InfraCap) to launch the Virtus InfraCap US Preferred Stock ETF (PFFA) on the NYSE Arca.
The fund seeks current income and capital appreciation in a sector that may be less understood by investors, said Jay Hatfield, founder and chief executive officer of InfraCap and co-portfolio manager. The fund will invest in a portfolio of more than 100 preferred securities issued by US companies with market capitalizations of more than USD100 million. With a focus on income, the fund offers the potential for attractive yields, while pursuing compelling total return results.
Portfolio managers rely on a variety of quantitative, qualitative and relative valuation factors to select securities and weightings for the fund. As part of their investment process, they evaluate companies for their competitive position, potential to earn high returns on capital, stability and reliability of profits, potential to generate cash in excess of growth needs, and access to capital. Modest leverage is used to seek enhanced portfolio beta and options strategies are used to seek enhanced current income.
“We are excited to offer PFFA because the nuances of preferred stock investing demands active management, which we can provide in an ETF form,” Hatfield says. “Investors can benefit from active management in this sector, as the call features of preferred stock often require portfolio managers to avoid capital losses on mandatory calls.”
The new ETF joins two other InfraCap products on the Virtus ETF platform, the InfraCap MLP ETF (AMZA), an actively managed MLP offering, and InfraCap Preferred REIT ETF (PFFR).
“InfraCap’s management style lends itself well to asset-like preferred stocks, and we believe investors seeking an enhanced income experience will find PFFA attractive,” says William Smalley, executive managing director of Virtus ETF Solutions.”We are also pleased to have the opportunity to extend our longstanding partnership with InfraCap with the launch of this third ETF on the Virtus ETF Solutions platform.”
