During the third quarter of 2025, the Virtus InfraCap U.S. Preferred Stock ETF (PFFA) demonstrated a notable outperformance compared to its primary benchmark, driven by strategic asset allocation and responsive portfolio management. The ETF's net asset value saw a robust return of 7.97%, significantly exceeding the 3.97% generated by the S&P U.S. Preferred Stock Index. This strong performance was achieved amidst a dynamic market environment characterized by an equity market rally and an increase in the risk-free rate, both influenced by the U.S. Federal Reserve's adjustments to interest rates, which generally created favorable conditions for broader market growth.
A critical factor contributing to PFFA's superior relative performance was its deliberate overweight positioning in preferred stocks issued by real estate investment trusts (REITs). This strategic emphasis capitalized on the sector's positive momentum, while the decision to underweight bank-issued preferred stocks proved beneficial given the prevailing market conditions. This calculated sector allocation played a pivotal role in enhancing the fund's returns, underscoring a proactive investment approach. Furthermore, the Fund consistently delivered a monthly dividend of $0.17 per share throughout the quarter, maintaining its commitment to income distribution for its investors.
The successful navigation of the market by PFFA in Q3 2025 reflects an astute understanding of sector dynamics and interest rate sensitivities, positioning the fund advantageously against its peers. By focusing on areas with strong growth potential like REIT preferreds and prudently managing exposure to less favorable sectors, the fund maximized returns for its shareholders. This quarter's results exemplify the benefits of strategic foresight and adaptive management in achieving significant alpha in the preferred stock market, reinforcing investor confidence and demonstrating the fund's capacity for resilient growth.
