Virtus Launches VPFF Preferred Stock ETF with 0.80% Fee

Virtus Investment Partners has launched a new actively managed preferred stock ETF, VPFF, sub-advised by Infrastructure Capital Advisors. The fund charges an annual expense ratio of 0.80%, higher than passive rivals. Its success hinges on the team's ability to manage call risk and sector concentration.

The Product

VPFF is an actively managed ETF focusing on high-yield preferred stocks. It aims to select the best opportunities while avoiding stocks with high call risk. The fund may have sector concentrations based on the managers' views.

Pricing and Availability

The expense ratio is 0.80% annually, higher than passive preferred stock ETFs which typically charge 0.20%-0.40%. VPFF trades on the NYSE under ticker VPFF.

Competition

VPFF competes with passive funds like PFF (iShares Preferred and Income Securities ETF, 0.46% fee) and PGX (Invesco Preferred ETF, 0.50% fee), as well as active funds like FPE (First Trust Preferred Securities and Income ETF, 0.85% fee). The challenge is to prove that active management justifies the higher fee.

Potential Impact on the Company

If VPFF delivers superior after-fee returns versus passive peers, it could boost Virtus's reputation in income ETFs and attract inflows. Failure to do so may limit the fund's growth.