Introducing the Global X U.S. Preferred ETF

Sep 13, 2017


  • The Global X U.S. Preferred ETF (PFFD) seeks to provide broad access to the US preferred asset class with an expense ratio of 0.23%, while the category average for ‘Fixed Income: U.S. – Corporate Preferred Stock’ was 0.48% as of 8/31/2017.1
  • Preferreds offer high yield potential to investors, with the asset class currently yielding 5.40%
  • PFFD, with broad benchmark-like exposure, joins the high income-seeking Global X SuperIncomeTM Preferred ETF in Global X’s family of preferred funds

A Low Cost Preferred Stock ETF

On September 13th, Global X launched the Global X U.S. Preferred ETF (PFFD), the 12th ETF in our Income suite, and the second focused on preferred stocks. PFFD is designed to provide broad access to the US preferred market with an expense ratio of 0.23%, while the category average for ‘Fixed Income: U.S. – Corporate Preferred Stock’ was 0.48% as of 8/31/2017. PFFD tracks the BofA Merrill Lynch Diversified Core U.S. Preferred Securities Index, which includes fixed, floating, and convertible, preferred securities. The index is market-capitalization weighted, while capping individual issuers at 10%.

In an environment where interest rates remain stubbornly low around the world, we believe that preferreds can help investors improve the yield of their portfolios. As of August 31, fixed rate preferreds, for example, yielded 5.40%, which is a higher yield figure than some traditional income generating asset classes like investment grade bonds and REITs. The income received from preferred stock can be particularly attractive because it is often classified as qualified dividend income (QDI), which is taxed at a lower rate than ordinary income.

PFFD joins the five year old Global X SuperIncome Preferred ETF (SPFF) in our family of preferred-focused ETFs. PFFD is intended to provide benchmark-like exposure to the preferred space, while SPFF targets the higher yielding segment of the preferred market. The table below provides additional information on the two funds.

More on Preferreds

Preferreds have unique characteristics that impact their yield, risks, and taxation. For more information on preferreds, please read this linked blog post.

In addition, we recently wrote about the bond markets and found that preferreds have been one of the best performing segments year to date (as of 8/14/2017).

Related Funds

PFFD: The Global X U.S. Preferred ETF invests in a broad basket of preferred securities in the United States.

SPFF: The Global X SuperIncome™ Preferred ETF invests in 50 of the highest yielding preferred stocks in North America.

Performance for each fund as of the most recent month- and quarter-end is available by clicking the name above.

Category: Articles

Topics: Preferreds

Investing involves risk, including the possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Preferred stock is subject to many of the risks associated with debt securities, including interest rate risk. In addition, preferred stock may not pay a dividend, an issuer may suspend payment of dividends on preferred stock at any time, and in certain situations an issuer may call or redeem its preferred stock or convert it to common stock. High yielding stocks are often speculative, high risk investments. These companies can be paying out more than they can support and may reduce their dividends or stop paying dividends at any time, which could have a material adverse effect on the stock price of these companies and the Fund’s performance. These Funds are non-diversified.

Carefully consider the Funds’ investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Funds’ summary and full prospectuses, which may be obtained by calling 1-888-GX-FUND-1 (1-888-493-8631), or by visiting Read the prospectus carefully before investing

Global X Management Company LLC serves as an advisor to Global X Funds. The Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC.

Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

Indices are unmanaged and do not include the effect of fees, expenses or sales charges. One cannot invest directly in an index.

This information is not intended to be individual or personalized investment or tax advice. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.

BofA Merrill Lynch Indexes have been licensed for use by Global X Management Company LLC. Global X Funds are not sponsored, endorsed, issued, sold, or promoted by BofA Merrill Lynch nor does BofA Merrill Lynch make any representations or warranties regarding the advisability of investing in or the suitability of the Global X Funds. BOFA MERRILL LYNCH INDEXES ARE “AS IS”. BOFA MERRILL LYNCH MAKES NO REPRESENTATIONS OR WARRANTIES AND DISCLAIMS ALL LIABILITY ARISING FROM THE BOFA MERRILL LYNCH INDEXES OR THEIR USE.