PFF vs PFXF: Which Is the Better Pick in 2026?

Overview

Both PFF and PFXF are monthly-paying preferred stock ETFs, but they track different universes. PFF holds U.S. dollar-denominated preferred and hybrid securities across the full market, including financials, and has substantially larger assets. PFXF excludes financials entirely—a deliberate sector filter that narrows its exposure to non-bank preferred issuers.

How they differ

The single biggest difference is sector scope: PFF includes preferred stocks from banks, insurers, and other financial firms, while PFXF explicitly excludes financials. That structural choice drives their yield gap—PFF's distribution rate of 5.99% sits 176 basis points above PFXF's 4.44%, since financials typically issue higher-yielding preferred securities.

PFF's underlying index is broader and more established, and the fund commands $12.5B in assets against PFXF's $2.39B—more than five times larger. The cost difference is modest: PFF charges 0.45% while PFXF charges 0.40%, a 5-basis-point gap that is dwarfed by the yield spread. Both funds distribute monthly and track comparable beta of roughly 0.95 and 0.96.

Who each is best for

PFF: Fits investors seeking maximum current income from preferred securities and comfortable with exposure to financial-sector issuers, which historically represent a substantial portion of the preferred market.

PFXF: Designed for investors who want preferred-stock income but want to avoid financials—whether due to sector concentration concerns, regulatory uncertainty, or a portfolio that already carries significant financial-sector weight elsewhere.

Key risks to know

• Sector concentration in PFF: Financial institutions dominate the preferred market, so PFF's broader mandate still carries meaningful financial exposure. A sharp widening in bank credit spreads or regulatory action affecting preferred issuance could pressure both funds, but PFF more acutely.

• Yield-dependent valuations: Both funds' high distribution yields depend partly on current interest-rate levels and credit spreads. Rising rates and tightening spreads could compress preferred valuations and NAV; conversely, a flight to yield could temporarily support prices.

• Call risk and refinancing: Most preferred shares are callable by the issuer when rates fall. A declining-rate environment would likely see many holdings called away at par, forcing reinvestment at lower yields and capping upside in both funds.

• PFXF's narrower opportunity set: By excluding financials, PFXF eliminates some of the highest-yielding issuers in the preferred market. This tilts PFXF toward lower-yielding but potentially less volatile names—a trade-off that may reduce total return potential.

Bottom line

If you want maximum income from a diversified preferred portfolio and accept financial-sector risk, PFF's larger asset base and 5.99% yield may appeal; if you prefer to sidestep financials and accept a lower 4.44% payout, PFXF's sector exclusion offers a cleaner alternative. Both carry interest-rate and refinancing risk inherent to preferred securities. Past performance does not guarantee future results.