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SPFF: A High Yield Preferred ETF With No Leverage

Published Wed, 25 Nov 2020 10:52:15 -0500 on Seeking Alpha

Seeking AlphaETF AnalysisSPFF: A High Yield Preferred ETF With No LeverageNov. 25, 2020 10:52 AM ET|| About: Global X SuperIncome Preferred ETF (SPFF)by: Trapping ValueTrapping Value Conservative Income PortfolioThe best way to provide income in today's markets while reducing risksSummaryGlobal X SuperIncome Preferred ETF tracks 50 of the highest-yielding preferred stocks in North America by following an index.
It has not deviated much from the index, but the index itself has not worked out well.
This may appeal to investors who think high-yield preferred shares are undervalued.
Global X has an interesting set of ETFs. We have found them to be a mixed bag with some big chronic underperformers and others (see here and here) having reasonable merit to justify consideration. Today we look at another offering from this company. The Global X SuperIncome Preferred ETF (SPFF) invests in 50 of the highest-yielding preferred stocks in North America. Now we have seen in the past that Global X has created ETFs to follow indices that don't seem to do a lot of screening. But the first thing we noticed here was that SPFF was actually following an S&P index.
The Fund will invest at least 80% of its total assets in the securities of the Underlying Index and in American Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs") based on the securities in the Underlying Index. Moreover, at least 80% of the Fund's total assets will be invested in preferred securities. The Fund may lend securities representing up to one-third of the value of the Fund’s total assets (including the value of the collateral received). The Underlying Index tracks the performance of the highest-yielding preferred securities in the United States and Canada, as determined by Standard & Poor's Financial Services, LLC, a subsidiary of the McGraw-Hill Companies ("S&P"), the provider of the Underlying Index ("Index Provider"). The Underlying Index is comprised of preferred stocks that... Read more