Daily ETF Watch: Preferred Fund Debuts

Elkhorn Investments rolled out its third ETF on the Bats stock exchange today. The Elkhorn S&P High Quality Preferred ETF (EPRF) comes with an expense ratio of 0.47%.

Preferred stocks are a sort of hybrid security that combines traits from both the fixed-income and equity spaces. For example, they pay a dividend based on a percentage of their par value and they give shareholders priority over common-stock owners in cases of distributions or liquidation.

The largest preferred stock ETF currently trading is the $15.5 billion iShares U.S. Preferred Stock ETF (PFF | B), which also charges an expense ratio of 0.47%. But while PFF can invest in preferred stocks without regard for credit rating, EPRF is limited to the investment-grade space—thus the “High Quality” portion of its name.

Components of EPRF’s index must also be U.S.-listed and pay a fixed-rate dividend, not a variable rate. Further, eligible securities need to have outstanding market capitalizations of at least $100 million and have traded at least 250,000 shares each month for the preceding six months.

Bats Global Markets is the owner of ETF.com.

Contact Heather Bell at [email protected].