ETF Watch: REIT Preferred Securities Fund Filed

Planned exchange-traded fund will focus on preferred securities issued by REITs.
Reviewed by: Staff
Edited by: Staff

A new filing outlines plans for an ETF likely to appeal to income-focused investors. The InfraCap REIT Preferred ETF (PFFR) will be advised by Virtus ETF Advisers and subadvised by Infrastructure Capital Advisors; it will list on the NYSE Arca exchange and is slated to come with an expense ratio of 0.45%.

PFFR’s index will target U.S.-listed preferred securities issued by real estate investment trusts (REITs). Each security must have at least $75 million in market capitalization and a six-month average monthly trading volume of at least 250,000 shares. The yield-to-worst on each security must be at least 3%, and diversification rules limit the weight of any REIT subsector to 30% of the index; however, the diversified REIT subsector is limited to 35%. Issuer weights are capped at 10%, the prospectus said.

As of the end of September, the index covered 26 issuers and 31 individual securities, the prospectus noted.

Currently, there are seven preferred stock ETFs that are listed in the U.S., but none of them is focused on REIT-issued securities. PFFR would be the first of its kind.

The only fund currently trading under the InfraCap brand, the InfraCap MLP ETF (AMZA), launched in October 2014 and has some $129 million in assets under management. Like PFFR, its focus is highly income-oriented, but it is actively managed.

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