PGF's Portfolio Review
PGF offers diversified exposure to financial sector preferred stocks, with 90% fixed-rate holdings and a focus on investment-grade credit quality (average Baa3 rating). The fund's portfolio is mainly composed of 71% fixed-rate preferreds trading below par, providing a yield to worst of 6.50% and attractive entry points. Resettable and fixed-to-floating rate preferreds add yield and interest rate risk diversification, though they represent a smaller portion of the portfolio.
Debunking Preferred Stock ETF Holdings Part 5: PGF's Portfolio Breakdown
The Invesco Financial Preferred ETF focuses on U.S. dollar fixed-rate preferred securities from financial companies, with a current yield of 6.25% and a 0.54% expense ratio. Fixed-rate preferred stocks below par make up 65% of the portfolio, offering an average weighted current yield of 6.18% and a Baa2 credit rating. Fixed to floating and resettable stocks are evaluated using a methodology that calculates expected internal rates of return, with average credit ratings around Baa3 and Ba1/Ba2 respectively.
PGF: Financial Preferred Stocks Look Unattractive
Invesco Financial Preferred ETF focuses on preferred stocks of financials companies. PGF shows a 2-digit decrease in both price and distributions over the last 10 years. PGF concentration in banks seems to be an additional factor of risk, as it has underperformed a preferred stocks ETF excluding financials.
