AAM Low Duration Preferred and Income Securities ETF (PFLD)

Overview

The AAM Low Duration Preferred and Income Securities ETF (PFLD) seeks to provide current income while maintaining a low duration profile. It invests primarily in preferred stocks and other income-producing securities with relatively short maturities, focusing on mitigating interest rate risk.

Reputation and Reliability

AAM is known for its expertise in fixed-income investments and managing strategies focused on income generation. They are considered a reliable issuer with a strong track record in specialized fixed-income products.

Management Expertise

The management team possesses extensive experience in fixed-income markets, preferred securities, and managing investment strategies focused on risk-adjusted returns.

Goal

The ETF's primary investment goal is to generate current income while maintaining a low duration profile to minimize interest rate sensitivity.

Investment Approach and Strategy

Strategy: The ETF does not track a specific index but actively manages a portfolio of preferred stocks and other income-producing securities.

Composition The ETF predominantly holds preferred stocks, but may also include corporate bonds, and other fixed income instruments.

Market Share: PFLD has a smaller market share compared to larger, more established preferred stock ETFs.

Total Net Assets (AUM): 162175625

Key Competitors

• iShares Preferred and Income Securities ETF (PFF)
• Global X U.S. Preferred Stock ETF (PFFD)
• Invesco Preferred ETF (PGX)

Competitive Landscape

The preferred stock ETF market is dominated by larger players like PFF and PFFD. PFLD differentiates itself through its focus on low duration. The main advantage of PFLD is its reduced sensitivity to interest rate changes, while a potential disadvantage is its smaller size and potentially lower liquidity compared to larger competitors.

Historical Performance: Historical performance varies depending on the interest rate environment and credit spreads. Data to input here.

Benchmark Comparison: The ETF's performance should be compared to benchmarks like the ICE BofA US All Capital Markets Preferred Securities Index to assess its effectiveness in generating income while managing duration.

Expense Ratio: 0.45

Average Trading Volume

The average trading volume of PFLD is moderate, indicating reasonable but not exceptionally high liquidity.

Bid-Ask Spread

The bid-ask spread varies but is generally reasonable, reflecting the liquidity and tradability of the underlying assets.

Market Environment Factors

PFLD's performance is affected by interest rate levels, credit spreads, and the overall health of the financial sector, as preferred stocks are sensitive to these factors.

Growth Trajectory

The ETF's growth depends on investor demand for income-generating assets and strategies focused on managing interest rate risk. Changes to strategy and holdings will be indicated in the ETF's prospectus.

Competitive Edge

PFLD's competitive edge lies in its specific focus on low duration within the preferred stock market. This differentiates it from broader preferred stock ETFs, making it attractive to investors seeking to mitigate interest rate risk. The active management aims to enhance returns through security selection and duration management, providing a potentially superior risk-adjusted return profile. AAM's expertise in fixed income also contributes to its competitive advantage.

Volatility

PFLD's volatility is generally lower than that of equity ETFs, but higher than very short-term bond ETFs. Its volatility is primarily driven by fluctuations in interest rates and credit spreads.

Market Risk

Specific risks include interest rate risk (though mitigated by the low duration strategy), credit risk (related to the issuers of the preferred stocks), and liquidity risk (particularly if the fund holds less liquid securities).

Ideal Investor Profile

PFLD is suitable for income-seeking investors, particularly those concerned about interest rate risk and seeking a low-duration fixed-income strategy. This includes retirees, conservative investors, and those looking to diversify their fixed-income portfolio.

Market Risk

PFLD is most suitable for long-term investors seeking a steady stream of income with relatively low interest rate sensitivity.

The AAM Low Duration Preferred and Income Securities ETF (PFLD) provides current income by investing in preferred stocks and other income-producing securities with a focus on low duration, making it less sensitive to interest rate changes. It is managed by AAM, a firm with expertise in fixed-income investments, and offers a differentiated strategy compared to broader preferred stock ETFs. While its market share is smaller than larger competitors, its low duration focus provides a competitive edge for investors seeking to mitigate interest rate risk. PFLD is a suitable option for income-seeking investors with a long-term horizon who are concerned about the impact of rising interest rates on their fixed-income portfolio.

Data Sources:

• AAM Website
• ETF.com
• Morningstar
• SEC Filings

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Market data is subject to change.