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Financial Preferred ETF (PGF) Hits New 52-Week High

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For investors seeking momentum, PowerShares Financial Preferred ETF ( PGF ) is probably on radar now. The fund just hit a 52-week high, and is up roughly 53% from its 52-week low price of $12.24/share.

But are more gains in store for this ETF? Let's take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed.

PGF in Focus

PGF provides exposure to the 86 preferred securities traded in the U.S. market issued by financial institutions. The product is heavily concentrated on the top three firms, HSBC Holdings, Barclays Bank Plc and Wells Fargo & Co, at around 8.00%. The product charges investors 63 basis points in fees (see: all Convertibles/CEFs/Preferred Stock ETFs here).

Why the Move?

The financial sector and preferred equities space has been an area to watch lately on the Fed lift-off. Both sectors have benefitted from the rising rate environment. While preferred equities are known for their high-yielding nature, the financial sector has been performing well this year on the possibilities of a rate hike. This has sparked off confidence among investors.

Preferred equities normally get priority over equity shares both in case of dividend payments as well as at the time of liquidation if the company fails. Preferred stocks are thus relatively stable and usually exhibit a low correlation with other income generating assets.

More Gains Ahead?

The fund has a positive weighted alpha of 2.49 . A positive weighted alpha hints at more gains. Further, the operating environment for the sector looks solid at the current level, so there is definitely some promise for those who want to ride this surging ETF a little further.

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PWRSH-FIN PFD (PGF): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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