Investors who bought the iShares Preferred & Income Securities ETF (NASDAQ:PFF) did so for one reason: steady monthly income from a diversified pool of preferred stocks, without picking individual issues. PFF is the largest preferred ETF on the market at $13.548 billion in assets, charges 0.45%, and has paid a monthly distribution since 2007. The problem is the paycheck. At a 5.52% dividend yield, a $100,000 stake in PFF generates roughly $5,500 a year. For a reader who wants closer to $10,000 on the same balance, an actively managed cousin from Virtus deserves a look.
What PFF Actually Delivers
The preferred-stock fund tracks the ICE Exposure-Weighted U.S. Preferred Stock Index, which is dominated by bank and insurance preferreds. The top of the book reads like a who’s who of U.S. financials: Boeing at 3.98%, plus large positions across Bank of America, JPMorgan, Morgan Stanley, and Goldman Sachs preferred series. The exposure is diversified, the beta is low at 0.53, and the price barely moves. That is the appeal and the ceiling.
The recent monthly distribution was $0.14174 per share, paid July 7, 2026. Total return has been muted: 2.62% over the past year and 3.84% cumulative over five years. In a world where the 10-year Treasury yields 4.56%, PFF’s income advantage over risk-free bonds is narrower than most holders realize.
The Yield Gap Is Structural
The passive index fund buys what the index tells it to buy, weighted by float. That means it holds a lot of investment-grade bank preferreds that price at low spreads and clip modest coupons. The Virtus InfraCap U.S. Preferred Stock ETF (NYSEARCA:PFFA) does two things differently, and both flow directly to the distribution.
First, PFFA is actively managed with 196 holdings selected for yield and mispricing rather than index weight. The portfolio leans into higher-coupon issues from mortgage REITs, hotel REITs, energy midstream, and specialty finance, sectors that PFF barely touches. Second, PFFA employs modest leverage. The April NPORT filing shows $606.4 million in liabilities against $2.95 billion in total assets, roughly 1.26x leverage. That combination produces a trailing twelve-month yield of 9.85% versus PFF’s 5.52%.
The math the headline promises: at 9.85%, $100,000 in PFFA yields roughly $9,850 per year, delivered in monthly checks of about $493, based on the current $ 0.1725-per-share distribution. That is nearly double what PFF pays on the same principal.
What You Give Up
The active, leveraged structure costs more. PFFA’s expense ratio is 2.11%, versus 0.45% for PFF. That gap is real, though it is already deducted from the distribution yield quoted above. The bigger tradeoff is drawdown risk. Leverage amplifies losses when preferred prices fall, as was seen acutely in 2022. PFFA’s beta of 0.68 is still low, but higher than PFF’s 0.53, and the fund’s smaller $2.41 billion asset base means wider bid-ask spreads on volatile days.
The upside case has held up recently. PFFA returned 7.81% over the past year and 31.96% over five years, both meaningfully ahead of PFF, with the Fed on hold at 3.75% since December 10, 2025. A rate-cut cycle would broadly help preferreds; a renewed hiking cycle would hit PFFA harder than PFF.
Distributions from both funds are a mix of qualified dividend income and ordinary income, so the tax profile in a taxable account is similar in character but larger in absolute dollars with PFFA. Readers considering a switch inside a taxable brokerage account should model any embedded capital gain in their existing PFF position before selling. Income seekers exploring monthly payers can find more ideas in our report on stocks that pay monthly.
Weighing the Swap
The bottom line: PFF is a fine core preferred holding for capital preservation with a modest income kicker. PFFA is a different instrument, with higher income, higher fees, and more sensitive to credit and rate shocks. A full swap makes sense for an investor whose actual goal is maximum monthly cash flow and who can tolerate a deeper drawdown in a weak market. A partial rotation, say half the position, captures most of the income lift while keeping some low-beta ballast. The choice depends on whether the extra $4,000 per $100,000 is worth the leverage it provides.
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