Institutional Pref Securities ETF Debuts

Today First Trust rolled out an actively managed preferred securities fund that targets a very specific slice of that particular space. The First Trust Institutional Preferred Securities and Income ETF (FPEI) covers preferred securities issued mainly for institutional investors and in blocks of at least $100,000 and increments of $1,000.

FPEI is listed on the NYSE Arca and comes with an expense ratio of 0.85%.

The fund will compete directly with the first-to-market Principal Spectrum Preferred Securities Active ETF (PREF), which covers the same slice of the preferred securities market and is also actively managed. The fund rolled out in July with a much lower expense ratio—0.55%.

According to its prospectus, PFEI’s strategy relies on analysis of credit fundamentals, relative value and technical aspects of the securities in question. It takes both top-down and bottom-up approaches to the analysis, taking into account everything from individual security analysis and idiosyncratic risks to capital structure positioning and systemic risks.

Contact Heather Bell at [email protected]