PFFA vs PFXF

Key Takeaways

• PFFA is an actively managed, semi-transparent ETF that may apply leverage to boost income, while PFXF is a passive, rules-based fund that tracks an index of non-financial preferred securities.
• Cost is a defining difference: PFFA carries a 2.11% net expense ratio, whereas PFXF charges 0.40%, a meaningful structural advantage for PFXF.
• Exposure profiles diverge sharply — PFFA is heavily weighted to financials (over half of assets), while PFXF deliberately excludes financials and concentrates in technology and utility preferreds.
• Both funds target current income, but PFFA seeks higher yield through active selection and optional leverage, while PFXF offers lower-cost, more diversified index exposure.
• Tickeron AI Verdict: On structural efficiency, diversification, and cost, PFXF is the preferred choice of the two.

Introduction

Preferred securities have become a focal point for income-oriented investors navigating an environment of still-elevated interest rates. Both PFFA and PFXF provide access to this hybrid asset class, yet they represent fundamentally different ways to build exposure. They are not direct substitutes: PFFA is an actively managed fund concentrated in financial-sector preferreds with optional leverage, while PFXF is a passive, non-financial preferreds strategy. This ETF comparison clarifies how their sector exposure, cost structure, and relative positioning shape investor outcomes.

Virtus InfraCap U.S. Preferred Stock ETF (PFFA) Overview

PFFA is an actively managed, semi-transparent ETF that seeks current income, with capital appreciation as a secondary objective. Launched in May 2018, the fund invests primarily in U.S.-listed preferred securities and may employ leverage to varying degrees to enhance yield. It typically holds roughly 190–200 positions, with a portfolio turnover rate near 24%.

Top holdings have recently included preferred issues from Strategy Inc, Alphabet Inc, Flagstar Bank, KKR & Co, Qwest Corporation, Energy Transfer, Boeing Co, and Oracle Corp. The fund is heavily concentrated in financials, which represented more than half of assets in recent reports, alongside meaningful allocations to real estate, industrials, communication services, and utilities. Its net expense ratio is 2.11%, reflecting active management and leverage-related costs. This concentration and cost profile make PFFA a higher-octane, financials-centric income vehicle.

VanEck Preferred Securities ex Financials ETF (PFXF) Overview

PFXF is a passively managed ETF that seeks to replicate the ICE Exchange-Listed Fixed & Adjustable Rate Non-Financial Preferred Securities Index. Launched in July 2012, the fund holds roughly 115–120 positions and is rebalanced monthly using a market-cap-weighted, rules-based methodology.

Its mandate intentionally excludes financial issuers, producing a distinctly different exposure profile. Recent top holdings include preferred issues from Boeing Co, Oracle Corp, Strategy Inc, Hewlett Packard Enterprise, Albemarle, Super Micro Computer, NextEra Energy, and Alphabet Inc. Sector weightings tilt toward software and IT services, electric utilities, REITs (real estate investment trusts), and hardware. The fund carries a 0.40% net expense ratio and is non-diversified. By avoiding the financial-heavy preferreds market, PFXF offers broader issuer diversification and a structurally lower cost base.

Industry and Thematic Backdrop

Preferred securities occupy a middle ground between equities and bonds, offering income potential competitive with high-yield debt. The sector is heavily influenced by interest-rate expectations: preferreds typically exhibit duration sensitivity and have been responsive to shifts in Treasury yields over recent market cycles. The preferreds universe is dominated by financial issuers, which is why an ex-financials strategy such as PFXF provides meaningfully different diversification.

Current catalysts include the ongoing yield hunt among income investors, capital flows into income-generating vehicles, and credit conditions affecting issuers. Regulatory capital requirements for banks continue to influence financial preferred issuance, while technology and utility issuers have expanded the non-financial preferreds segment. Sector risks include rate volatility, credit downgrades, and concentration in specific issuers or industries.

Performance and Positioning Comparison

In recent weeks and months, the two funds have exhibited different risk and return characteristics tied to their underlying exposures. PFFA's financial-heavy, leveraged positioning has made it more sensitive to credit conditions and rate moves, while its higher expense ratio represents a persistent drag on net returns. Its distribution yield has historically trended higher, reflecting leverage and active selection.

PFXF, by contrast, has shown lower volatility relative to the broader equity market, with a beta near 0.6 against the S&P 500 in recent risk measures. Its technology and utility tilt has positioned it toward issuers with different earnings and cash-flow drivers than the bank-dominated preferreds complex. Over recent market cycles, this has translated into steadier, if lower, headline income. For investors weighing fund performance and relative positioning, the trade-off is essentially yield and leverage versus cost efficiency and diversification.

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Tickeron AI Verdict

Based on observable structural factors, Tickeron's AI would currently favor PFXF. Its 0.40% expense ratio offers a decisive cost advantage over PFFA's 2.11%, and its ex-financials mandate provides broader issuer diversification within the preferreds asset class. A passive, rules-based, monthly-rebalanced framework supports trend consistency and transparency, while its lower beta suggests more measured volatility. Although PFFA may deliver higher headline income through leverage and active management, its financials concentration and elevated costs weaken its structural profile. On a probabilistic, cost- and diversification-adjusted basis, PFXF presents the stronger relative positioning of the two.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

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