Investors have just been given one more trading instrument meant to track a less-followed investment class. State Street Corporation (NYSE: STT) has announced that its State Street Global Advisors has launched a new ETF to track preferred shares. This is the SPDR® Wells Fargo® Preferred Stock ETF (NYSE: PSK) began trading on the NYSE Arca this morning. The volume is still extremely thin on this one, but this could be yet another key ETF that serves the very ‘under-served’ preferred stock market for investors.
Its annual expense ratio is 0.45 percent. The SPDR Wells Fargo Preferred Stock ETF seeks to track the performance of the Wells Fargo® Hybrid and Preferred Securities Aggregate Index. This index includes non-convertible preferred securities with a par amount of $25.00. These are rated investment grade by Moody’s or Standard & Poor’s, but it appears as though a release came out in March that would allow for some non-investment-grade securities. The press release did not note that exception though.
These underlying preferreds in this index are also set to have a minimum monthly trading volume of at least 250,000 trading units and is comprised of more than 160 securities.
What is key here is that this preferred stock class is a much better fit for risk-averse investors who want to seek a tad more safety than what they have seen in the realm of common stocks. Generally, these are meant to offer a higher dividend and less volatility. That is not always the case, but that is the intent. These are also meant to offer a slightly higher place in the corporate structure, and that was a key issue for many investors in the last down-cycle.
As this is a new ETF launch, there are currently no knew ratings or rankings available at this time.
Jon C. Ogg
September 17, 2009