Preferred stocks can offer investors a steady income stream and potential price appreciation, but their complexity requires careful management. The Virtus InfraCap U.S. Preferred Stock ETF (NYSE: PFFA) is an actively managed exchange-traded fund that seeks to provide total return and high current income by investing in a diversified basket of preferred stocks. With over $2 billion in assets under management as of September 11, 2026, PFFA aims to mitigate risks such as call risk, interest rate risk, and issuer default through dynamic portfolio management.
According to a press release distributed via NEWMEDIAWIRE, preferred stocks tend to offer higher yields than common stocks and bonds, with potential tax advantages and low correlation to traditional asset classes. In a high-interest-rate environment, these features make preferreds attractive to income-seeking investors. However, risks include call risk, sector concentration, and dividend suspension. Passive funds may not respond quickly to changing market conditions, potentially leaving investors exposed.
PFFA's active approach, led by portfolio manager Jay D. Hatfield of Infrastructure Capital Advisors, allows for tactical adjustments. For example, if the Federal Reserve raises rates, Hatfield can increase exposure to floating-rate or higher-yielding securities. The fund also monitors call dates daily to minimize exposure to callable securities trading above par, and diversifies between fixed-rate and fixed-to-floating-rate securities to manage interest rate risk. To learn more about the potential benefits of PFFA, visit PFFA.
Beyond risk management, PFFA seeks opportunities such as investing in newly issued preferreds before index inclusion, identifying credit improvements, and capitalizing on merger-related redemptions. The fund can also use leverage to deploy capital during market downturns. "Handling the complexities specific to the asset class may require the finesse of an active manager," the release stated. For more details on the fund, including its objectives and risks, investors can click here. The fund's prospectus is available at www.virtus.com.
This news matters because preferred stocks are a popular income-generating asset, but their intricacies can lead to losses for unprepared investors. PFFA's active management aims to provide a smoother experience, potentially offering both income and capital appreciation. As interest rates and inflation remain uncertain, the fund's ability to adapt could be crucial for portfolio diversification and risk-adjusted returns. The original release was published on Benzinga, with further disclosures available here.
