Infrastructure Capital Advisors, led by Founder and CEO Jay Hatfield, is making a push to capitalize on preferred stocks, which carry more risk than bonds but are not as risky as common stocks. Hatfield manages the Virtus InfraCap U.S. Preferred Stock ETF (PFFA) and leads the company’s investing and business development efforts. According to Hatfield, high yield bonds and preferred stocks tend to perform well when the stock market is strong and during times like the current period, when the Federal Reserve is tightening monetary policy.
The ETF managed by Hatfield has seen impressive returns in recent years, with a 10% increase in 2024 and a nearly 23% increase over the past year. The three top holdings of the Virtus InfraCap U.S. Preferred Stock ETF as of September 30 are Regions Financial, SLM Corporation, and Energy Transfer LP, all of which have seen gains of about 18% or more this year. Hatfield’s team selects investments that they believe are undervalued relative to their risk and yield, with a focus on asset-intensive businesses.
Despite its strong recent performance, the Virtus InfraCap U.S. Preferred Stock ETF has seen a decline of almost 9% since its inception in May 2018. Hatfield remains confident in his investment strategy, citing the potential for preferred stocks to outperform in a strong market and during times of economic recovery. With a focus on selecting mispriced opportunities in asset-intensive businesses, Hatfield aims to generate positive returns for investors in the long term.
Preferred stocks are a unique asset class that offers investors a hybrid security with characteristics of both bonds and common stocks. While they carry more risk than bonds due to their lower priority in the event of liquidation, preferred stocks typically offer higher yields than common stocks and seniority over common shareholders. With the potential for strong returns during periods of market growth and economic recovery, preferred stocks can be an attractive option for investors seeking income and capital appreciation.
Infrastructure Capital Advisors’ focus on preferred stocks reflects a growing interest in alternative fixed income investments that offer higher yields than traditional bonds. With a strategy centered on identifying undervalued opportunities in asset-intensive businesses, the Virtus InfraCap U.S. Preferred Stock ETF aims to provide investors with a diversified portfolio of preferred stocks that can deliver attractive risk-adjusted returns. Despite fluctuations in performance, Hatfield remains optimistic about the long-term potential of preferred stocks and is committed to delivering value for investors through his ETF.
In conclusion, Infrastructure Capital Advisors’ Jay Hatfield is leveraging the potential of preferred stocks to generate returns for investors through the Virtus InfraCap U.S. Preferred Stock ETF. With a focus on asset-intensive businesses and a strategy designed to identify undervalued opportunities, Hatfield aims to outperform in a strong market and during periods of economic recovery. While preferred stocks carry more risk than bonds, they offer investors the potential for higher yields and seniority over common shareholders, making them an attractive option for investors seeking income and capital appreciation in today’s market environment.
