Invesco Variable Rate Preferred ETF

VRP tracks a market-value-weighted index of variable- and floating-rate preferred stocks.

VRP tracks the ICE Variable Rate Preferred & Hybrid Securities Index, offering a 5.33% yield at a 0.50% expense ratio. It has outperformed a lot of its peers, but in a generally low-interest-rate environment, other ETFs can offer equally good returns with better consistency and less risk. Also, VRP carries significant sector concentration risk, with nearly two-thirds of the funds in financials, and includes a lot of below-investment-grade preferred stocks.

VRP: The Value May Not Justify The Fees

I've been long on the Invesco Variable Rate Preferred ETF since 2022, and have increased my position in recent months in expectation of higher monthly distributions. VRP recently declared an October distribution of $0.1428, a sequential increase of 30%, and the highest so far in 2024. I see continued blue skies for VRP in the next half-year, on the basis of the reset structure, the ETF's duration, and Fed Funds expectations.

Still Flying 'VRP Air' After The Distribution Increase

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2024 has been a tough year for most bond funds, as delayed rate hikes led to lower bond prices. Some bond ETFs have managed to outperform in spite of these tough conditions. These tend to focus on investments with low, sometimes negative, duration.

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The Invesco Variable Rate Preferred ETF has outperformed in a rising rate environment due to its low duration and floating rate nature. VRP is weighted heavily towards the financial sector - investors should be keenly aware of this. Despite anticipated interest rate cuts, VRP's preferred stock holdings may continue to reset at higher dividends until at least 2025. This means I will continue to rate VRP a Buy.

VRP: Assessing My Floating Rate Preferred ETF As Interest Rates Set To Decrease

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Despite relative outperformance in recent years, I cannot justify an allocation to PFFA.

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PFFA is a well-diversified and consistently top-performing preferred stock ETF, enabled by management's bold allocation strategy.

U.S. Preferred Stocks Look Attractive And PFFA Is A Top-Performing Preferred Stocks ETF

Variable rate preferred stocks offer adjustable dividends tied to benchmark interest rates, making them appealing during rising interest rate periods.

VRP: Good Yield Over Time

VRP is an ETF that focuses on preferred equity from financial institutions, but with a twist - its collateral has to be at least 90% invested in floating rate securities. VRP has outperformed its fixed rate peer PFF since the beginning of the Fed tightening cycle due to its low duration of 1.93 years. PFF is expected to record an additional 9% gain versus VRP as rates move lower given historic correlations and duration impact.

VRP: Time For A Swap

iShares Preferred and Income Securities ETF is the dominant preferred ETF with over $12.76 billion in assets under management. The Invesco Variable Rate Preferred ETF could be getting more attention due to its floating rate exposure that shows less sensitivity to rising interest rates. Both had seen their yields start to rise, but some of those gains for PFF have been reversing more recently, while VRP's payout has continued to rise.

VRP Vs. PFF: Choice Comes Down To Outlook On Rates

Inflation may not be dissipating anytime soon, which may require fixed income investors to seek other avenues of yield aside from bonds. One place to look is the Invesco Variable Rate Preferred ETF (VRP).

Stubborn Inflation Warrants This Variable-Rate ETF

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When looking for the best dividend ETFs for retirement, stability often outweighs thrill. Investing in growth stocks can be exciting, but for retirees, the allure lies in investments offering predictable performance and regular profits over the long term.

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Invesco Variable Rate Preferred ETF is an exchange traded fund focused on preferred equity. The fund has an overweight position in financials, which account for over 74% of the portfolio.

VRP: Variable Rate Preferred Shares With Low Duration

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Invesco has six non-core fixed income ETFs that advisors can add to portfolios to create alpha opportunities and increase portfolio diversification. Exposure to non-core fixed income is important as the largest U.S. bond index only provides exposure to approximately 40% of the U.S.

Use Invesco's Non-Core Fixed Income ETFs to Enhance Returns

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The Federal Reserve announced on March 22 that it was raising its key interest rate by 25 basis points, the ninth consecutive increase. As interest rates increase, dividend ETFs and those investing in them are caught in a perplexing situation.

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The VRP ETF provides exposure to variable rate preferred equities and hybrid securities. Preferred equities sit between debt and common equity in the capital structure and trade inversely to credit spreads, like high yield bonds.

VRP: Preferred Stocks May Be Better Than Corporate And Junk Bonds

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The year 2022 has produced the worst returns in 100 years for the classic 60/40 strategy. Should you tap 40/60 ETF strategy now?

Time for a 40/60 ETF Portfolio Instead of 60/40?

The Invesco Variable Rate Preferred ETF is down over 15% since my article last November, when I thought its variable-rate strategy would do okay when the FOMC pushed up rates. Here I take a look at VRP's largest holdings and try to decipher why its performance was poor. Analysis compares its return against other Fixed Income ETFs that took different paths.

Invesco Variable Rate Preferred ETF Follow Up: Performed Worse Than Expected

In low interest rate environments, preferred stocks and the related exchange traded funds are among income investors' favored destinations. However, as is the case with multiple high-yield asset classes, preferreds are often vulnerable to rising interest rates — the very scenario that investors are contending with today.

The Right Way to Consider Preferred Stocks as Rates Rise

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Interest rates will rise in 2022. It shouldn't make dividend ETFs any less attractive.

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Historically, high-yield asset classes have been vulnerable to rising Treasury yields. That includes preferred stocks — a favored income destination.

Variable Preferred ETF Offers Floating-Rate Note Alternative

The Invesco Variable Rate Preferred ETF is designed to capture better rates as they go up by investing in Floating or Variable Preferred securities. With rising inflationary pressures and possible start of Fed tapering, forecasts are for all Fixed Income assets to experience an environment where rates are climbing.

VRP: Variable Rate Preferred ETF: Nice Choice If Rates Rise

The threat of rising interest rates still lingers over the financial market in this low-rate environment. One option to consider is the Invesco Variable Rate Preferred ETF (VRP).

Here's An ETF to Get Income and Hedge Against Rising Rates

Extracting maximum yield in this low rate environment is difficult when rates are at the whims of the Federal Reserve, but there are solid options available to investors, including the Invesco Variable Rate Preferred ETF (VRP). It's one thing to seek higher yield, but it's another matter entirely to get quality exposure.

Fight Low Yields with Preferred ETFs, ‘VRP'

With government bond yields low, many income investors are embracing alternative yield sources this year, including preferred stocks and their related exchange traded funds. While yields on preferreds remain elevated relative to broader equity benchmarks and aggregate bond funds, some market observers believe preferreds are currently priced for perfection.

The VRP ETF: One Way to Juice Preferred Stock Returns

Invesco offers an extensive lineup of BulletShares exchange traded funds – the issuer's version of defined maturity ETFs. These products are popular with advisors and investors because BulletShares ETFs reach into a variety of corners of the fixed income market, including corporate bonds – both investment-grade and junk – and municipal bonds.

News for Invesco Variable Rate Preferred ETF ETF (VRP)