ETF selected: Invesco Preferred Shares UCITS ETF Dist
What's in this ETF?
In this ETF, you'll find mostly preferred shares of banking and financial institutions (76.6% of the investment) such as JPMorgan Chase, Wells Fargo and Bank of America.
The remainder is made up of industrial companies (11.5%) and energy and water treatment companies (10.1%). Investment is almost exclusively in the USA (95.3%).
The ETF, which is fairly modest in size ($173.3 million in assets under management), is passively managed, meaning that it replicates an index. Dividends are distributed quarterly.
What are its advantages?
- Preferred shares provide regular, stable income that is known in advance.
- The ETF is also listed on Euronext Milan in Euro, which excludes the Dollar exchange rate risk.
Negative points
- AUM is rather low. This is not a negative point in itself, but it does mean that you need to keep an eye on liquidity when trading.
- Performance since Covid has been mediocre, as a fixed-rate investment cannot keep pace with soaring interest rates. Preference shares could regain their appeal once interest rates start to fall.
- Fees are fairly high (0.50%).
- The ETF is highly concentrated in banking and financial stocks. As a result, diversification is fairly limited.
ETF identity card:
ISIN code: IE00BDVJF675
Ticker: PRFD
Fees: 0.50