If you've got a bucket list of ETF candidates, here's another one for your preferred stock bucket. The actively managed First Trust Preferred Securities and Income ETF (FPE) went live on February 12, 2013, offering investors a global hybrid security mix aiming for at least 80% of assets in U.S. and non-U.S. preferred securities and income-producing securities: corporate bonds, high yield securities, and convertible securities.
Stonebridge Advisors LLC of Wilton, CT, specializing in preferred securities, acts as the sub-advisor and will manage the fund's portfolio. The fund charges a hefty 0.85 fee.
FPE's just-birthed portfolio contains 78 holdings with a weighted effective duration of 6.69 years. Holdings are 81% North American and 19% European, with country exposure at U.S. 81%, United Kingdom 13.3%, Netherlands 4% and Spain 1.9%.
First Trust now offers a suite of three actively managed funds, the others being the First Trust High Yield Long/Short ETF (HYLS) which also opened in February 2013, and the First Trust North American Energy Infrastructure Fund (EMLP), which opened in June 2012.
Interestingly, but not readily apparent from First Trust's web site, is that FPE echoes its Stonebridge Advisors LLC-managed mutual fund of the same name (FPEIX). The mutual fund version, in Morningstar's long-term bond category, opened in February 2012 and currently has 119 holdings with an average duration of 6.49 years. For one year the mutual fund is up 12.60%; YTD 2.57%, with a healthy three-month upside of 3.21%. ETF investors inclined toward FPE may want to take a look at its mutual fund equivalent to get a better feel for the how the Stonebridge managers are doing one year out of the gate.
While First Trust's FPE is the only actively managed preferred stock ETF now available, there are a plethora of U.S.-focused and global preferred stock ETFs already on the market. They include:
SPDR Wells Fargo Preferred Stock ETF | 0.45% net expense ratio | (PSK)
iShares S&P U.S. Preferred Stock Index Fund | 0.48% | (PFF)
PowerShares Preferred Portfolio | 0.50% | (PGX)
PowerShares Financial Preferred Portfolio | 0.66% | (PGF)
iShares S&P International Preferred Stock Index | 0.55% | (IPFF)
Market Vectors Preferred Securities ex Financials ETF | 0.40% | (PFXF)
Global X Canada Preferred ETF | 0.58% | (CNPF)
Global X Super Income Preferred ETF | 0.58% (with "Enhanced Index" | (SPFF)