PFFA vs PGX: Which Is the Better Pick in 2026?

Overview

PFFA and PGX are both monthly-distribution ETFs focused on U.S. preferred stocks, but they differ fundamentally in structure and cost. PFFA is an actively managed fund charging 2.52% in annual fees and targeting a 9.92% distribution rate through selective portfolio construction and capital structure opportunities. PGX is a passively managed fund with a 0.50% expense ratio and a 6.94% yield, designed to track the broader preferred stock market with lower turnover and fees.

How they differ

The most striking difference is cost: PFFA's 2.52% expense ratio is more than five times PGX's 0.50%, a 202-basis-point drag on annual returns. PFFA compensates with a higher 9.92% distribution rate versus PGX's 6.94%—roughly 298 basis points of additional yield. The second difference lies in management philosophy. PFFA's active approach claims to exploit capital structure opportunities and selectivity; PGX offers index-like breadth, holding a wider array of preferred issuers with lower fees. Third, size and maturity create different liquidity profiles: PGX has $3.79B in assets and has traded since 2008, while PFFA has $2.48B and launched in 2018. PGX's beta of 1.21 suggests slightly higher market sensitivity than PFFA's 1.07.

Who each is best for

• PFFA: Fits investors with high current-income needs who believe active management can justify a 2%+ annual fee premium through superior security selection and capital gains, and who are comfortable with preferred-stock volatility relative to investment-grade bonds.

• PGX: Fits investors seeking broad preferred-stock exposure with minimal cost drag, who are skeptical that active management adds value in the preferred sector, and who prioritize lower annual fees over the prospect of higher distributions.

Key risks to know

• NAV erosion at elevated yields. PFFA's 9.92% distribution rate is substantially higher than PGX's 6.94%, raising questions about the sustainability of distributions and whether they lean on return-of-capital treatment, which would erode net asset value over time.

• Preferred-stock interest-rate risk. Both funds hold securities whose prices move inversely to rising rates; preferred stocks typically exhibit this sensitivity more acutely than dividend stocks. PGX's higher beta of 1.21 versus PFFA's 1.07 suggests it may experience larger price swings in a rising-rate environment.

• Active-management performance risk. PFFA's fee burden and active mandate require its managers to generate excess returns after fees to justify the cost. Underperformance relative to passive peer PGX would compound the fee disadvantage.

• Liquidity and issuer concentration. Preferred-stock markets are less liquid than large-cap equities; PFFA's active strategy may concentrate positions in select issuers believed to offer opportunity, increasing single-name risk if credit events emerge in those holdings.

Bottom line

If you prioritize lower ongoing costs and broad market exposure, PGX's 0.50% expense ratio and passive structure stand out; if you seek higher current distributions and believe active security selection can recoup its 2.52% fee, PFFA merits closer examination. The 298-basis-point yield gap between them suggests the income premium comes from both higher-yielding holdings and likely return-of-capital distributions—a tradeoff that hinges on your tax situation and ability to sustain the higher payout without eroding principal. Past performance does not guarantee future results.