Van Eck Files For Ex-Financials Preferred Stock ETF

Includes: CNPF, IPFF, PFF
by: Stoyan Bojinov

Bullish momentum has cooled off a bit on Wall Street this week although the good news keep coming in. Investors were happy to see the latest homebuilders index release on Monday, although a slightly worse-than-expected existing home sales report on Wednesday managed to tip indexes lower. Vank Eck has laid down the groundwork for an intriguing equity fund that allows for investors to beef up a portfolio’s current return without taking on excessive risk.

Meanwhile, New York-based issuer Van Eck has filed with the SEC for a preferred stock ETF with a twist (see SEC filing):

Market Vectors Preferred Securities ex-Financials ETF: The underlying index for this ETF will consist of convertible and nonconvertible U.S.-listed preferred stocks. The distinguishing feature of this fund is the fact that it avoids exposure to financial securities, potentially increasing the appeal for those who wish to avoid this often times volatile sector. Investors should however note that it will include REITs, as these securities are not considered “financials” according to the SEC proposal. The company did not disclose a ticker or expense information at the time of the filing.

This new product may appeal to investors looking to enhance their current return with preferred stock exposure, while at the same time avoiding the financials sector.

This Van Eck offering will join a handful of others from the Preferred Stock ETFdb Category: The iShares S&P U.S. Preferred Stock Index Fund (NYSEARCA:PFF) is currently the biggest fund in the space with over $8.3 billion in assets under management. The second most popular ETF in this category is also from iShares: The S&P International Preferred Stock Index Fund (NYSEARCA:IPFF) has approximately $95 million in assets under management.

Industry veterans PowerShares and State Street also offer broad-based preferred stock ETFs for investors looking to tap into this corner of the market. For those interested in geographically targeted exposure, Global X has a country-specific offering available, the Canada Preferred ETF (NYSEARCA:CNPF). The proposed Van Eck preferred stock ETF will have some fierce competition from a number of more established products as mentioned above, although this offering will have bragging rights as it will be the only one that excludes financials.

Disclosure: No positions at time of writing.

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