NEW YORK, Sept. 13, 2017 /PRNewswire/ -- Global X Funds, the New York-based provider of exchange traded funds (ETFs), today launched the Global X U.S. Preferred ETF (BATS: PFFD). Tracking the BofA Merrill Lynch Diversified Core U.S. Preferred Securities Index, the fund provides investors with broad exposure to the income-oriented U.S. preferred asset class. PFFD's expense ratio is 0.23%, while the ETF.com category average for 'Fixed Income: U.S. - Corporate Preferred Stock' was 0.48% as of 8/31/2017.
Preferred stocks are considered hybrid securities that exhibit both fixed-income and equity-like characteristics. They can play an important role in potentially improving a portfolio's yield, which may be particularly appealing to investors during this persistently low interest rate environment. Preferreds are junior to bonds on a firm's capital structure, therefore often resulting in higher yields than similar fixed income securities. In addition, the income received from preferred stocks is often classified as qualified dividend income, which is taxed at a lower rate than the income received from corporate bonds, which is usually taxed as ordinary income.
"Investors continue to contend with low interest rates and narrow credit spreads, making sufficient income difficult to come by. Preferreds, however, currently have attractive yields that sets them apart from other traditional income-generating asset classes like investment grade bonds and REITs," said Jay Jacobs, director of research at Global X.
"We are excited to launch PFFD, offering investors a low cost option for accessing the preferred market. The asset class's attractive yield potential, coupled with potential tax benefits make preferreds an important consideration for an income-oriented portfolio," added Jon Maier, chief investment officer at Global X.
PFFD's underlying index includes fixed, floating and variable-rate preferred securities with a minimum amount outstanding of $100 million. The index is market-capitalization weighted, with a 10% cap for individual issuers. PFFD is Global X's twelfth ETF in its income suite and joins the Global X SuperIncome Preferred ETF (SPFF) in the Global X's family of preferred funds.
ABOUT GLOBAL X
Seeking to provide access to high-quality and cost-efficient investment solutions, Global X is a New York-based sponsor of exchange-traded funds (ETFs). Founded in 2008, we are distinguished by our smart core, income, alpha, risk management and access suites of ETFs and have more than 50 funds available across U.S. and foreign exchanges. Global X is recognized as a leader in developing intelligent investment solutions for our clients.
Investing involves risk, including the possible loss of principal. Preferred stock is subject to many of the risks associated with debt securities, including interest rate risk. In addition, preferred stock may not pay a dividend, an issuer may suspend payment of dividends on preferred stock at any time, and in certain situations an issuer may call or redeem its preferred stock or convert it to common stock. High yielding stocks are often speculative, high risk investments. These companies can be paying out more than they can support and may reduce their dividends or stop paying dividends at any time, which could have a material adverse effect on the stock price of these companies and the Fund's performance. PFFD is non-diversified.
Carefully consider the Fund's investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund's summary and full prospectuses, which may be obtained by calling 1-888-GX-FUND-1 (1-888-493-8631), or by visiting www.globalxfunds.com. Read the prospectus carefully before investing
Global X Funds are distributed by SEI Investments Distribution Co. (SIDCO), which is not affiliated with Global X Management Company LLC.
Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. This information is not intended to be individual or personalized investment or tax advice. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.
BofA Merrill Lynch Indexes have been licensed for use by Global X Management Company LLC. Global X Funds are not sponsored, endorsed, issued, sold, or promoted by BofA Merrill Lynch nor does BofA Merrill Lynch make any representations or warranties regarding the advisability of investing in or the suitability of the Global X Funds. BOFA MERRILL LYNCH INDEXES ARE "AS IS". BOFA MERRILL LYNCH MAKES NO REPRESENTATIONS OR WARRANTIES AND DISCLAIMS ALL LIABILITY ARISING FROM THE BOFA MERRILL LYNCH INDEXES OR THEIR USE.
 Average net expense ratio of ETF.com's category "Fixed Income: U.S. - Corporate Preferred Stock." (0.48%) as of 8/31/17.