A financial company tries to capitalize on preferred stocks – these carry more risk than bonds, but are not as risky as common stocks.
Jay Hatfield, founder and CEO of Infrastructure Capital Advisors, leads the company Virtus InfraCap US Preferred Stock ETF (PFFA). He leads the company's investments and business development.
“High-yield bonds and preferred stocks … tend to perform better than other bond categories when the stock market is strong and we are coming out of a tightening cycle like we are now,” he told CNBC's “ETF Edge” this week.
Hatfield's ETF is up 10% in 2024 and nearly 23% last year.
The top three holdings of his ETF are Regions Finance, SLM CorporationAnd Energy transfer LP As of September 30, according to FactSet. All three stocks are up about 18% or more this year.
Hatfield's team selects names that it believes are mispriced relative to risk and return, he said. “Most of the largest holdings are in so-called asset-intensive companies,” Hatfield said.
Since its launch in May 2018, the Virtus InfraCap US Preferred Stock ETF has fallen nearly 9%.