InfraCap REIT Preferred ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The team managing this passive strategy earns the strategy an Average People Pillar rating. The fund's assessment garners an Average Process Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

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InfraCap REIT Preferred ETF earns an Average Process Pillar rating. Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. The largest contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 55%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. This fund tracks an index, which also increases its process rating. Historical data, such as Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Lastly, the process is limited by the fund's mediocre long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

The investment strategy as stated in the fund's prospectus is: 

The investment seeks investment results that correspond, before fees and expenses, to the price and yield performance of the Indxx REIT Preferred Stock Index (the "underlying index").  Under normal market conditions, and the fund will invest not less than 90% of its assets in component securities of the underlying index. The underlying index is comprised of preferred securities listed on U.S. exchanges that are issued by real estate investment trusts ("REITs"). The fund is non-diversified.  

 This strategy has a 7.7% 12-month yield, higher than its average peer's 5.9%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 7.0%. Higher yields tend to indicate higher credit risk.

Average

Process

Virtus’s team earns An Average People Pillar rating. The largest contributor to the rating is its parent firm's five-year success ratio of 54%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The stability of the management team also contributes to the rating. Specifically, the fund has not seen a manager change in the last seven years. Lastly, the rating is limited by the parent firm's five-year retention rate of 66%, which suggests it could do more to hold onto its portfolio managers.

People

Virtus Investment Partners has been busy; its actions support an Average Parent rating.

The publicly traded firm uses a multimanager approach. It fully owns all but one of its 13 affiliated asset managers and also uses subadvisors. Since 2020, it purchased five affiliates, expanding its alternative offerings through its 2021 Westchester Capital Management acquisition. It also entered an agreement to buy quant alternatives manager AlphaSimplex, with an expected close in early 2023. Affiliates appreciate Virtus' distribution and back-office strength, while enjoying investment autonomy. Some of its managers are strong, such as  Kayne Anderson Rudnick, which constitutes roughly 30% of Virtus' assets under management.

In 2022, Virtus was forced to find new management for 17 of its funds that were subadvised by Allianz Global Investors, following the SEC disqualification of AGI from providing advisory services to U.S.-registered funds for 10 years. While Virtus had no connection to the AGI strategies at the center of the investigation, it had to find new management for the AGI subadvised funds within 90 days. Virtus maintained some portfolio managers who moved firms, but they hired affiliates for most of the mandates. Some were natural fits, but others were questionable, such as those on Virtus Global Allocation. Meanwhile, Virtus has merged or liquidated a number of funds, and its fees tend to be above average.

Parent

InfraCap REIT Preferred ETF

PFFR tracks a modified market-cap-weighted index of US-listed preferred securities issued by real estate investment trusts (REITs).

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We take a look at the action in preferreds and baby bonds through the fourth week of March and highlight some of the key themes we are watching. Preferreds had a good week as Treasury yields fell on the back of the Fed's more dovish than expected stance. We take a look at how stocks with different spreads over SOFR could react to Fed's cuts.

Preferreds Weekly Review: Keep An Eye On The Spread Of Floating-Rate Preferreds

We take a look at the action in preferreds and baby bonds through the third week of March and highlight some of the key themes we are watching. Preferreds were down for the week due to rising Treasury yields, but most preferred CEF sectors remain positive for the month. Albemarle issued a new preferred stock with a mandatory convertible feature, offering upside participation with less downside than the common and a higher coupon.

Preferreds Weekly Review: Mandatory Convertibles Offer High-Beta Preferred Exposure

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Building a dividend income snowball for retirement provides clarity and reduces sequence of returns risk. This article provides a sample portfolio of seven funds that can easily fund a retirement with a $1.5 million nest egg. The portfolio should generate around $6,500 per month in sustainable passive income along with a hedge against bad times hitting.

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We take a look at the action in preferreds and baby bonds through the fourth week of February and highlight some of the key themes we are watching. Preferreds had a strong week with a 1%+ return, driven by a drop in Treasury yields and compression in credit spreads. Different preferreds sectors have different drawdown profiles, offering investors an opportunity to tilt to more resilient securities in anticipation of the next drawdown.

Preferreds Weekly Review: Historic Drawdowns Are Relevant Again

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PFFA is a well-diversified and consistently top-performing preferred stock ETF, enabled by management's bold allocation strategy.

U.S. Preferred Stocks Look Attractive And PFFA Is A Top-Performing Preferred Stocks ETF

We take a look at the action in preferreds and baby bonds through the second week of February and highlight some of the key themes we are watching. Preferreds were flat on the week as higher Treasury yields were offset by tighter credit spreads. A high yield-to-call is not a sufficient reason to buy a given preferred.

Preferreds Weekly Review: A High Yield-To-Call Is Not Enough

We take a look at the action in preferreds and baby bonds through the fourth week of January and highlight some of the key themes we are watching. Preferred stock and baby bond market had a good week with most sectors finishing in the green. The article discusses the curious case of Aspen insurer preferred AHL.PR.C and how the coupon conversion worked on the first call date.

Preferreds Weekly Review: AHL Preferred Gets Stuck Near Libor Peak

InfraCap MLP

NEW YORK--(BUSINESS WIRE)--The InfraCap MLP ETF (NYSE Arca: AMZA) (the “Fund”) has declared a monthly distribution of $0.26 ($3.12 per share on an annualized basis). The distribution will be paid January 30, 2024 to shareholders of record as of the close of business January 23, 2024. AMZA Cash Distribution: Ex-Date: Monday, January 22, 2024 Record Date: Tuesday, January 23, 2024 Payable Date: Tuesday, January 30, 2024  The Virtus InfraCap U.S. Preferred Stock ETF (NYSE Arca: PFFA) (the “Fund”).

Virtus InfraCap ETFs (AMZA/PFFA/PFFR) Declare Monthly Distributions

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The bets over imminent Fed rate cuts weakened on central banks' cues. These ETFs that offer protection against rising rates are at a 52-week high currently.

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The best preferred stock ETFs allow you to reduce your risk by investing in baskets of preferred stocks.

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During this Fed tightening cycle, preferred stocks have declined significantly below par value which is normally $25. Buying preferred stocks at below par can represent an excellent total return opportunity as the current dividend yield is high relative to treasuries and other bonds. Also, there's the potential for price appreciation if the securities return to par.

Debunking The Mystery Behind REIT Preferreds

The InfraCap REIT Preferred ETF tracks the performance of preferred shares issued by U.S. equity and mortgage REITs. PFFR offers diversification across the entire U.S. REIT space with very limited allocations into single company preferred instruments. In the past 3-year period, PFFR has underperformed VNQ on a total return basis due to higher duration factor.

PFFR: Attractive 8% Yield With A Defense Component Attached

PFFR offers investors exposure to REIT preferred. It offers investors a strong 8.1% dividend yield but is less diversified than most of its peers. The fund's strong yield makes it a buy, but the fund's niche holdings mean positions should be kept small.

PFFR: REIT Preferred ETF, Strong, Stable 8.1% Yield

Preferreds are fixed income instruments that normally provide strong yield but minimal capital appreciation potential. Recently, however, prices have become dislocated and irrational. They now have around 50% capital appreciation potential on top of outsized dividend yields.

Dislocation Of The REIT Preferred Market - PFFR

The Virtus InfraCap REIT Preferred ETF currently yields a healthy 8.8%, paying a monthly dividend of $0.12 per share. PFFR's dividend rate is expected to rise over the next two to four years due to the Federal Reserve's potential lowering of the Federal Funds Rate. The risks of investing in PFFR are limited, with potential returns outweighing the risks, making it an attractive long-term investment option.

Consider PFFR For Income And Price Appreciation

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Many preferred stocks are now heavily discounted and offer high yields. Since real estate is well-known for its cash generation capabilities, REIT preferreds often offer better risk-to-reward. We discuss two REIT preferreds with yields above 8% for your consideration.

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Storage REITs are the best-performing property sector this year after lagging in late 2022, lifted by surprisingly solid earnings results and a thawing of the previously icy-cold housing market. Storage demand is driven largely by housing activity – specifically, home sales and rental market turnover - and the recent moderation in mortgage rates has eased concern of a deepening housing recession.

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The REIT sector gave up most of January's big gains in February with a -6.18% total return. Small cap (-7.42%) and mid cap (-6.05%) REITs fell the furthest in February, with micro caps (-5.15%) and large caps (-4.74%) seeing smaller declines.

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Investors tired of pie-in-the-sky tech profits might look for more concrete returns. Infrastructure Capital Advisors' best ETFs offer options.

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The REIT sector sharply rebounded from a tough 2022 with an +11.77% total return in January 2023. Micro cap REITs (+16.16%) saw disproportionately strong gains in January, followed by double-digit returns for small caps (+11.79%), mid caps (+11.50%) and large caps (+10.07%).

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Preferred shareholders enjoy a seniority in the time of dividend payment over common equity and also have a preference over the company's assets. InfraCap REIT Preferred ETF's attractiveness relies primarily on its monthly payout with current 7.8% yield. PFFR's stable dividend is also indicative of reasonably higher quality of holdings.

PFFR: A Fully Covered Strong And Steady-Yielding REIT Preferred Stocks ETF

Despite delivering the strongest earnings growth of any property sector in 2022, Self-Storage REITs have stumbled of late amid a post-pandemic demand normalization and pressure from elevated supply growth. Storage demand is driven largely by housing activity – specifically home sales and rental market turnover. Rental market turnover finished 2022 near historic-lows while home sales also dipped to decade-lows.

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The REIT sector ended a brutal 2022 on a low note, with a -7.72% total return in December. Large cap (-4.89%), mid cap (-6.03%) and small cap (-8.21%) REITs all averaged single-digit declines December, but micro caps (-15.21%) fell much more sharply.

The State Of REITs: January 2023 Edition

News for InfraCap REIT Preferred ETF ETF (PFFR)