Goldman Sachs Asset Management Introduced a new preferred stock fund – its fifth fund for 2024. Goldman Sachs Axis U.S. Preferred Equity and Hybrid ETF (GPRF) It began trading on August 8, according to a company press release.
The statement said that the GPRF Fund aims to provide high monthly income to investors. It achieves this through exposure to US preferred stocks and hybrid securities.
“Grade bonds are back to yielding an average of 6-7%, which is consistent with historical context,” Gary Kessler, portfolio manager at GBRF, said in an email, explaining the current market opportunity.
Kessler believes these returns are attractive, especially given expectations of a near-term rate cut by the Federal Reserve.
“Favorites usually do well in a facilitative environment,” he points out.
Preferred stock ETF provides income potential.
The statement said that the fund benefits from the unique characteristics of preferred securities. These characteristics are shared by both debt and equity. They typically provide higher returns than common stock dividends or corporate bonds.
According to the statement, the GPRF Fund aims to invest in various sectors of the preferred stock market.
“The preferred market can be a bit of a niche market because it includes two different trading (markets), the $1,000 OTC market and the $25 ETF market,” Kessler said. “GPRF invests in both markets, which provides a broader universe of investments than some other funds.”
GPRF uses a rules-based approach to its stock selection process. Kessler notes that this methodology helps screen out securities with negative yields until their next maturity, which can sometimes happen in a $25 market due to market dynamics. This screening process is intended to enhance the funds’ return potential.
The ETF also aims to provide diversification benefits. Kessler notes that preferred stocks “typically have lower correlations to underlying investment-grade fixed income instruments.”
Goldman Sachs Expands Into Municipal Bond ETFs
This launch follows Goldman Sachs’ recent expansion into municipal bond ETFs. Last week, the firm introduced four actively managed municipal bond ETFs, including Goldman Sachs Short-Term Municipal Income Fund (GUMI) And the Goldman Sachs Municipal Income Fund (GMUB).
Since its announcement, GPRF has already attracted $19.9 million in inflows, according to etf.com data. With GPRF, Goldman now offers 43 exchange-traded funds.
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