PFFD charges half of PFF’s 0.46% fee while delivering a higher 6.5% yield from a nearly identical preferred stock portfolio.
PFFA amplifies its yield to 11% through leverage, but its 2.1% expense ratio is nearly ten times what passive competitors charge.
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Preferred stock ETFs have become a common income vehicle for investors chasing yield above what investment-grade bonds can offer. Three funds dominate the category: iShares Preferred and Income Securities ETF (NASDAQ:PFF), Global X U.S. Preferred ETF (NYSEARCA:PFFD), and Virtus InfraCap U.S. Preferred Stock ETF (NYSEARCA:PFFA). Distributions across the trio currently span roughly 6% to 11%, but the gap in fees, structure, and risk is wide enough that the three funds differ enough in cost and structure to appeal to distinct buyers.
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Preferred shares pay fixed dividends and sit senior to common stock in the capital structure while ranking junior to debt. That places them in a niche where the 10-year Treasury at 4.7% sets the reference rate, and preferred ETF distributions add roughly 200 to 600 basis points on top depending on structure. The category is heavily concentrated in bank and insurance issuers, since financials are the largest issuers of preferred capital.
iShares Preferred and Income Securities ETF (PFF)
The incumbent, with $13.3 billion in net assets, is PFF, making it by far the largest preferred stock ETF and the most liquid choice for size orders. The fund tracks a broad index of U.S. dollar-denominated preferred securities, holding a diversified basket dominated by banks, insurers, utilities, and REITs.
The portfolio spreads across hundreds of positions, with meaningful concentrations in JPMorgan Chase, Bank of America, Morgan Stanley, Wells Fargo, and Athene Holding preferred issues. Boeing preferred shares are the single largest position at 4%, an unusual industrial exposure in an otherwise financials-heavy portfolio.
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Pricing is where the incumbent story weakens. PFF charges an expense ratio of 0.46% against a distribution yield near 5.5%. Monthly distributions recently ran around $0.14 per share, and shares trade near $30. The fund returned roughly 3% on price over the past year, meaning almost the entire investor return arrives through the coupon.
Scale and liquidity are real advantages for institutional users, but retail buyers pay more in fees for a portfolio that a cheaper competitor tracks almost identically.
Global X U.S. Preferred ETF (PFFD)
Earning its spot on this list because the fee structure genuinely rewards the buyer is PFFD. The fund tracks the ICE BofA Diversified Core U.S. Preferred Securities Index and charges an expense ratio of 0.23%, roughly half what PFF costs. On a portfolio yielding 6.5%, that fee gap compounds meaningfully over multi-year holding periods.
Holdings look strategically similar to PFF: heavy in JPMorgan Chase, Wells Fargo, Bank of America, Morgan Stanley, Citigroup, Duke Energy, and NextEra preferred series, spread across more than 200 positions. Boeing again anchors the top of the book at 5%, with Albemarle preferred stock adding another 3%. The fund manages $2.25 billion in assets, a fraction of PFF’s scale but ample for retail investors and most advisors.
Distributions have held at $0.10 per share every month in 2026, and shares trade near $18. Price return over the past year was 3%, essentially matching PFF’s price performance while paying a higher yield net of fees.
The tradeoff is smaller scale and lower trading volume, which matters for institutions moving size but rarely affects typical retail allocations.
Virtus InfraCap U.S. Preferred Stock ETF (PFFA)
Active management combined with leverage is the different approach PFFA takes. The fund borrows against its portfolio to amplify exposure, with liabilities equal to about 21% of total assets. That structural boost is how PFFA delivers a distribution yield near 11% from a portfolio of preferred shares that would otherwise yield 6% to 7% unlevered.
The active portfolio tilts toward smaller and mid-sized issuers than the passive alternatives carry. Top positions include Flagstar Bank, First Citizens Bancshares, Banc of California, Energy Transfer, KKR, Apollo Global, and RLJ Lodging Trust preferred issues, each in the 2% to 2.5% range. The fund has $2.35 billion in net assets and pays $0.1725 per share monthly, up from $0.17 in 2025.
The cost of that yield is steep, and PFFA’s expense ratio sits at 2.1%, nearly ten times what PFFD charges. Leverage amplifies losses as well as gains. Over the past year, PFFA gained 6% on price, roughly double PFFD, but leveraged preferred portfolios historically drop harder when credit spreads widen or long rates jump sharply. The current environment, with the 10-year Treasury near its 12-month high at the 99th percentile, has already tightened conditions for borrowed-capital income strategies.
Tradeoffs are concentrated: buyers accept meaningfully higher fees, leverage risk, and active manager risk in exchange for a distribution rate that no unlevered peer can match.
Choosing Among the Three
For income-focused investors, PFFD offers the most competitive fee-to-yield profile in this category. It delivers essentially the same market exposure as PFF for roughly half the fee, and the yield differential favors PFFD on any multi-year horizon.
Institutional investors gravitate toward PFF, where trading liquidity and creation-unit efficiency justify the extra cost. Retail buyers who own PFF for the yield are effectively paying a premium for scale they do not use.
In the preferred securities space, PFFA occupies a category of its own. Investors who understand and accept leverage risk, seek the highest possible current distribution, and are willing to pay a 2% fee for active management in a specialized corner of the market will find it appealing. It functions as a leveraged income vehicle that utilizes preferred shares, serving a distinct role compared to passive alternatives.
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