Generated August 8, 2026.
Overview
Both PFF and PFXF are monthly-paying preferred stock ETFs, but they differ fundamentally in their scope and holdings. PFF tracks a broad index of U.S. dollar-denominated preferred and hybrid securities, giving it substantial exposure to financial-sector preferred stocks. PFXF deliberately excludes financials, concentrating instead on preferred issuers in utilities, energy, industrials, and consumer sectors. The exclusion creates a meaningfully different risk profile and income source despite similar stated yields.
How they differ
The single biggest difference is sector composition: PFF holds financials-issued preferred stocks—a category that typically yields higher because banks and insurance companies were heavy issuers after the 2008 crisis. PFXF strips those out entirely, which lowers concentration risk in one volatile sector but also removes a core source of the preferred-stock income universe. Second, PFF is substantially larger—$13.3B in AUM versus $2.46B for PFXF—which typically translates to tighter trading spreads and lower portfolio turnover costs. Third, PFXF's expense ratio is 5 basis points cheaper at 0.41% versus PFF's 0.46%, a modest but real advantage that compounds over years; both charge far less than active preferred-bond funds.
Who each is best for
PFF: Fits investors seeking broad preferred-stock exposure without sector tilts, including those comfortable with financials' credit cycles and who want the largest, most liquid preferred ETF available.
PFXF: Designed for investors who want preferred income but view financial-sector concentration as a specific risk they'd rather avoid, or who expect utilities and industrials to outperform banks in a given rate or economic environment.
Key risks to know
- Preferred-stock rate sensitivity. Both funds hold securities that behave like long-duration bonds when interest rates rise, pressuring share price regardless of sector mix. With beta at 0.97 for each, rate moves will drive NAV swings larger than the equity market but smaller than long-term Treasuries.
- Financials-driven credit risk in PFF. Because PFF includes preferred issued by banks and insurers, it inherits credit cycles tied to those sectors—capital ratios, loan-loss provisions, and regulatory changes. PFXF sidesteps this, but it also loses a diversified income stream, creating concentration risk in utilities and energy.
- Call risk and yield compression. Preferred stocks are often callable at par when rates fall. Both funds may experience principal gains capped by call provisions, and yields may compress if issuers exercise calls and redeploy proceeds at lower yields.
- Sector overlap outside financials. While PFXF excludes financials, both funds likely hold preferred from the same utilities and industrial issuers, so their non-financial holdings may correlate closely.
Bottom line
If you want exposure to the full preferred-stock opportunity set without active tilting, PFF's size and broad index method stand out; if you're uncomfortable holding financial-sector credit and prefer a financials-free profile, PFXF's exclusion comes with a slight cost-of-ownership advantage. Neither is a substitute for interest-rate risk management—both move together when yields shift—so the choice hinges on sector conviction, not yield alone. Past performance doesn't predict future results.
AI-generated analysis for educational purposes only. Verify important details independently; past performance does not guarantee future results.
