Trap!? PFFA’s 9.6 Percent Preferred Yield Hides Up to 33 Percent Borrowed Leverage Most Income Investors Never See
Key takeaways
- In March 2020, PFFA lost over 52% in weeks and cut its monthly distribution 21%, while PFF only fell 17%.
- The analyst who called NVIDIA in 2010 just named his top 10 stocks and VIRTUS INFRACAP U.S.
- Preferred Stock ETF (NYSEARCA:PFFA) is a distribution yield at 9.67%, which looks generous against the unleveraged iShares Preferred and Income Securities ETF (NASDAQ:PFF) at 5.6%.
Trap!? PFFA’s 9.6 Percent Preferred Yield Hides Up to 33 Percent Borrowed Leverage Most Income Investors Never See Pla2na / Shutterstock.com Omor Ibne Ehsan Mon, May 25, 2026 at 7:30 PM GMT+7 5 min read PGX PFF PFFA NVDA Quick Read Virtus Infra Cap U.S. Preferred Stock ETF (PFFA) offers a 9.67% distribution yield by leveraging up to 25% of net assets at SOFR-plus rates to amplify returns, versus i Shares Preferred and Income Securities ETF (PFF) at 5.6% unleveraged and Invesco Preferred ETF (PGX) with similar mechanics, but PFFA’s 2.11% expense ratio reflects the cost of borrowed money. In March 2020, PFFA lost over 52% in weeks and cut its monthly distribution 21%, while PFF only fell 17%.
When credit spreads widen or forced deleveraging occurs, leverage amplifies losses on both the preferred bond yields and financing costs simultaneously, making PFFA suitable only as a 3-5% income allocation in tax-advantaged accounts for investors who accept equity-like drawdowns.
The analyst who called NVIDIA in 2010 just named his top 10 stocks and VIRTUS INFRACAP U.S. PREFERRED STOCK ETF wasn t one of them. Get them here FREE.