PFFR: Like All Duration Bets, Standing In The Way Of Inflation

The InfraCap REIT Preferred ETF (PFFR) is a preferred shares ETF focused on the preferred shares of mortgage and property REIT ETFs in a 1:3 ratio, mainly fixed-rate preferreds, mostly callable, as per the PFFR: Like All Duration Bets, Standing In The Way Of Inflation Summary - The InfraCap REIT Preferred ETF faces interest rate and associated duration risk, making it unattractive in the current environment. - PFFR’s exposure to both property and mortgage REIT preferreds, often fixed-rate and callable, affirms the duration risk and introduces negative convexity considerations. - There are also asset value considerations for the equity dimension of preferred securities in the way of short- and long-term rate upside risks. - The 0.45% expense ratio is reasonable, but persistent inflation and cost-push factors render preferreds like PFFR unappealing as duration bets. - Looking for a helping hand in the market? Members of The Value Lab get exclusive ideas and guidance to navigate any climate. Learn More » This article was written by Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.