The Only Low-Duration Preferred Income ETF on the Market
PLD is our first product that got up over $500 million. It's been a very good story for us to tell. It's very unique. It is the first and only low-duration preferred product in the marketplace currently. For that reason, it appeals to investors because it really does help solve a problem that preferred investors face, and that's risk mitigation while also maintaining high levels of income.
Not only high levels of income but tax-efficient income as well. PFLD does focus on low duration, so duration mitigation is obviously at the front of PFLD, but I think one area that is often overlooked as well is how we look to mitigate call risk as well. So while we remove securities that have an effective duration over five years to really hone in on the interest rate sensitivity of the portfolio, PFLD's underlying index also removes securities that are trading north of 105% of face value. That call screen right there is very valuable in interest rate environments that we're experiencing today.
As interest rates come down, these preferred securities are going to be more frequently called. By doing this, we have the ability to minimize our exposure to those securities that are going to be called. The other major differentiator for PFLD versus many of our peers, specifically the legacy preferred ETFs out in the marketplace, is that PFLD actually includes thousand-dollar PAR OTC preferred securities.
Why this is unique is because if we go back maybe seven to ten years ago, the $25 exchange-listed retail preferred really dominated the marketplace in terms of the preferred assets in the marketplace. Fast forward to today, nearly 70% of the preferred stock market is in these OTC preferred securities. Many of our peers do not incorporate these. It is more problematic on operations and trading and everything, but we are awfully proud to incorporate to include not only $1,000 par preferred securities but also $25 exchange-listed preferred in PFLD as well.
That really does help obviously increase diversification, more holdings, more diversification, but it allows us to provide what we think is really an evergreen preferred product no matter what interest rate environment we are. We think we can provide through PFLD the benefits of the asset class: high yield, tax efficiency, diversification, and upside capital appreciation.
