One local financial firm is taking advantage of the opportunities presented by preferred stocks, which offer higher returns than bonds, but are less risky than common stocks. Infrastructure Capital Advisors, led by Founder and CEO Jay Hatfield, is behind the Virtus InfraCap U.S. Preferred Stock ETF (PFFA).
According to Hatfield, high yield bonds and preferred stocks tend to perform well when the stock market is strong and when transitioning out of a tightening cycle, as is the current situation. The ETF managed by Hatfield has seen a 10% increase in 2024 and a significant 23% increase over the past year.
As of September 30, the ETF’s three main holdings include Regions Financial, SLM Corporation, and Energy Transfer LP, all of which have seen gains of at least 18% this year. Hatfield’s strategy involves selecting stocks that he believes are undervalued in relation to their risk and yield, with a focus on asset-intensive businesses.
Despite experiencing a 9% decrease since its inception in May 2018, the Virtus InfraCap U.S. Preferred Stock ETF has shown promise for investors looking to capitalize on the current market conditions. Hatfield’s expertise and strategic approach to investing in preferred stocks have proven successful, offering investors the potential for favorable returns in a Fed rate cut environment.
Investing in preferred stocks can be a valuable addition to a diversified investment portfolio, providing a balance between risk and return. While preferred stocks may carry more risks than bonds, they offer higher yields and can serve as a strategic investment choice in various market conditions.
As investors navigate the complexities of the financial markets, understanding the potential benefits of preferred stocks and the expertise of investment professionals like Jay Hatfield can help in making informed decisions. With a focus on selecting undervalued assets and asset-intensive businesses, investors can position themselves for favorable returns in the evolving market landscape.
In conclusion, preferred stocks present an opportunity for investors seeking to maximize returns while managing risks effectively. By leveraging the expertise of financial professionals and staying informed about market trends, investors can make strategic investment decisions that align with their financial goals and objectives.