US-based Market Vectors has announced the launch of the Market Vectors Preferred Securities ex Financials ETF (PFXF), a fund designed to offer investors access to the income potential of preferred securities without the volatility of financials.

The largest holding within the Market Vectors launches Preferred Securities ex Financials ETF (PFXF) is General Motors preferred B stock. (© General Motors)

PFXF, which has been listed on the  NYSE Arca, seeks to replicate the price and yield performance of the Wells Fargo Hybrid and Preferred Securities ex Financials Index (WHPSL), a rules-based index intended to track the overall performance of publicly traded non-financial preferred securities.

The index included securities that, in Wells Fargo Securities’ judgment, are functionally equivalent to preferred securities such as convertible securities, depository preferred securities and perpetual subordinated debt.

Top industries in the index as of June 30, 2012 included REITs, electric, auto manufacturers and telecommunications. The index excludes financials, such as broker-dealers, banks, futures commission merchants, investment advisers and insurance companies.

Major holdings currently include General Motors (10.06%), PPL Corporation (6.88%), Apache Corp (3.67%), United Technologies (3.46%) and Health Care REIT (2.44%).

“In developing PFXF, we wanted to offer access to the income potential of preferred securities but limit potential volatility by excluding financials, which has been the most volatile sector in recent years,” said Brandon Rakszawski, Product Manager with Market Vectors. “We’re please to be able to offer this unique take on the preferred securities market while also launching PFXF with the lowest published net expense ratio of the preferred securities-focused ETFs currently listed in the US.”

“PFXF is the latest in a series of income-oriented ETFs we have brought to market over the past year,” said Jan van Eck, President of Market Vectors ETF Trust. “In the process of expanding our line-up, we have offered exposure to several underrepresented areas of the market underscoring our commitment to yield-focused investors.”

PFXF is the 50th ETF in the Market Vectors family, which is currently the fifth largest ETF family in the US, as measured by assets under management. The fund joins a line-up of 14 income-oriented ETFs including six municipal income ETFs, high-yield bond ETFs such as the Market Vectors Fallen Angel High Yield Bond ETF (ANGL) and the Market Vectors International High Yield Bond ETF (IHY) and dividend-focused offerings, such as the Market Vectors Mortgage REIT Income ETF (MORT).

With a net expense ratio of 0.40%, PFXF has the lowest published net expense ratio among preferred securities-focused ETFs listed in the US.