Finance
Inside PFFA: Beating the Preferred Index
Date: 2025-01-19 13:54:18
In this exclusive interview, I sit down with Jay Hatfield, Founder, CEO, and Portfolio Manager of InfraCap, for a deep dive into the PFFA fund: a high-yield preferred stock ETF. With a 9% yield, consistent monthly distributions, and a track record of outperforming the preferred stock index, PFFA should be on every income investor’s radar. We discuss the strengths and weaknesses of this fund since its inception, and its outlook for the future.
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Timestamps:
00:00 Introduction
00:20 Why is PFFA your largest personal investment?
02:01 Why do companies issue preferred shares?
03:11 Are preferred shares misunderstood?
06:24 How do you manage credit risk?
10:30 How do interest rates affect preferred shares?
14:25 Is PFFA weighted more towards fixed or floating rate preferred shares?
17:15 Can you manage market risk?
18:17 How did the pandemic affect PFFA distributions?
21:16 Did any of the PFFA holdings declare bankruptcy during the pandemic?
23:48 Was the pandemic the most dramatic example of market risk?
25:10 Did you reduce leverage after the pandemic?
26:10 PFFA outperformed its largest competitor, PFF, since its 2018 inception
26:30 Can you explain the difference in long term performance between PFFA and PFF?
28:26 When is a good time to buy or sell PFFA?
32:10 How would you characterize the stability of the distributions from PFFA?
33:16 What’s the relationship between Virtus and Infracap?
33:58 How much of the expense ratio is management fee versus interest expense?
37:28 What is the tax treatment for PFFA?
39:27 What are your expectations for interest rates and PFFA over the next 1 – 2 years?
44:08 What are your expectations for PFFA’s distributions over the next 1 – 2 years?
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