 The
Variable Rate Preferred Invesco ETF seeks to provide investors with
exposure to a diversified portfolio of variable rate preferred
securities. The fund is managed by Invesco, a leading global
investment management firm.
As of September 2021, the VRP ETF
had a net asset value of approximately $4 billion and held a portfolio
of preferred securities issued by companies in various sectors,
including financials, utilities, and energy. Variable rate preferred
securities are a type of hybrid security that have features of both
debt and equity securities, and generally pay a fixed dividend rate
that is periodically reset based on a benchmark interest rate.
Investing in preferred securities may offer investors the potential
for higher yields than traditional fixed-income securities, as
preferred securities often have higher coupon rates than bonds.
However, investing in preferred securities may also expose investors
to various risks, including interest rate risk, credit risk, and
liquidity risk.
The expense ratio for the VRP ETF is 0.50%,
which is relatively low compared to some other preferred securities
ETFs. This may make the VRP ETF an attractive option for investors
seeking exposure to preferred securities at a reasonable cost.
Overall, the Variable Rate Preferred Invesco ETF may be a suitable
investment for investors seeking exposure to variable rate preferred
securities with the potential for higher yields than traditional
fixed-income securities. However, as with any investment, it is
important to conduct your own research and consider your investment
goals and risk tolerance before investing in the fund. Investors
should also keep in mind the potential risks associated with investing
in preferred securities, including interest rate risk, credit risk,
and liquidity risk.
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