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iShares Preferred And Income Securities ETF: 5.8% Yield, Monthly Payer, But...

Published Fri, 26 Jun 2020 09:15:00 -0400 on Seeking Alpha

Seeking AlphaETF AnalysisiShares Preferred And Income Securities ETF: 5.8% Yield, Monthly Payer, But...Jun. 26, 2020 9:15 AM ET|| About: iShares Preferred and Income Securities ETF (PFF)by: Double Dividend StocksDouble Dividend Stocks Hidden Dividend Stocks PlusTarget 5-10% yields backed by solid earnings for better portfolio income.SummaryPFF yields 5.87%, with variable monthly distributions.
It has underperformed the market, but outperformed the financial sector in 2020 and over the past year.
It has slightly outperformed the market since the February 2020 highs.
One of the big selling points for ETFs over the past few years has been the value of their diversification. The ETF investor lets the pro managers do the research and heavy lifting, and is rewarded with much better performance and less risk, via a fund of many different holdings, vs. just a few that a retail investor may have the time to research and monitor.
That sounds reasonable, but guess what happened to that theory in the COVID-19 crash? Out the window, like so many other once-workable ideas.
The iShares Preferred And Income Securities ETF (PFF) is a case in point. Talk about diversification - it has 496 holdings, with net assets of $15.42B. Expenses are low, at just .46%, with no leverage.
"The iShares Preferred and Income Securities ETF seeks to track the investment results of an index composed of U.S. dollar-denominated preferred and hybrid securities." (iShares site)
Unlike the previous two pullbacks in May 2019 and Q4 2018, during which PFF outperformed the market by wide margins, it has outperformed the S&P 500 by 76 basis points since the February market highs.
To be fair, though, it does have a much higher yield than the S&P or the Dow, so it has done a bit better on a total return basis. Tracking its price performance year-to-date, year, quarter, and month, though, shows that it has outperformed the broad Financial Sector ETF (XLF), but it has lagged the... Read more