This ETF is Hedged Against ANY Interest Rate Changes

Going to take a step back and just go through what PFLD is. This is another rules-based strategy here on the AM ETF platform, honing in on the US preferred securities landscape. Essentially, our selection universe for this portfolio is the entire US preferred securities market: exchange-listed preferred and over-the-counter preferred. Those $1,000 par values are included in that selection universe.

As far as the duration risk goes from that selection universe, PFLD's tracking index will incorporate two filters. One is that duration risk screen, which kind of goes back to your original question regarding that PFLD's tracking index is going to remove any preferred stocks that have a duration above that of 5 years.

But for the other side of the fence, and even in an interest rate environment where rates are lowering, PFLD actually has another screen within its portfolio where PFLD will screen out any preferred that are trading 5% above their face value. So in a lowering interest rate environment where preferred, which tend to have call options attached to them, that call risk tends to ramp up during times of lowering interest rates and increases reinvestment risk in that regard.

As far as interest rate risk goes from both sides of the fence, not just rising rates, but lowering rates, PFLD is pretty multi-purpose in that regard. So as far as its exposure goes, I mentioned, you know, we're filtering from that initial universe of just retail and OTC preferred. Most of its exposure right now is within that pretty desirable area, the preferred market, that OTC $1,000 par market. Close to 75% of its portfolio can be found in that particular space.

Those types of securities tend to be variable rate in terms of their coupon structure. And that again is just another kind of side component of what makes PFLD from a duration management risk standpoint.