What is a preferred stock ETF?

Preferred stock ETFs invest in preferred shares, which sit between bonds and common equity in a company's capital structure. Preferreds often pay higher dividends and can appeal to income-focused investors.

Preferreds can be sensitive to interest rates (because of their income-like nature) and to issuer credit risk, especially if the fund is concentrated in financial issuers.

If you're evaluating a preferred ETF, check sector concentration, credit quality, call features, and how distributions are taxed in your jurisdiction. Preferreds can look bond-like but can behave differently in stress.