Skip to content

IAU vs. PFF: What’s The Difference?

The iShares Gold Trust (IAU) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. IAU is a iShares N/A fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between IAU and PFF? And which fund is better?

The expense ratio of IAU is 0.21 percentage points lower than PFF’s (0.25% vs. 0.46%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than PFF over the past 11 years.

In this article, we’ll compare IAU vs. PFF. We’ll look at annual returns and portfolio growth, as well as at their performance and industry exposure. Moreover, I’ll also discuss IAU’s and PFF’s holdings, fund composition, and risk metrics and examine how these affect their overall returns.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

IAUPFF
NameiShares Gold TrustiShares Preferred and Income Securities ETF
CategoryN/APreferred Stock
IssueriSharesiShares
AUM28.61B19.8B
Avg. Return6.03%6.90%
Div. Yield0.0%4.47%
Expense Ratio0.25%0.46%

The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

The iShares Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

IAU’s dividend yield is 4.47% lower than that of PFF (0.0% vs. 4.47%). Also, IAU yielded on average 0.87% less per year over the past decade (6.03% vs. 6.90%). The expense ratio of IAU is 0.21 percentage points lower than PFF’s (0.25% vs. 0.46%).

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Fund Composition

Industry Exposure

IAU vs. PFF - Industry Exposure

IAUPFF
Technology0.0%0.0%
Industrials0.0%10.27%
Energy0.0%0.0%
Communication Services0.0%0.0%
Utilities0.0%81.81%
Healthcare0.0%3.54%
Consumer Defensive0.0%0.0%
Real Estate0.0%0.65%
Financial Services0.0%0.0%
Consumer Cyclical0.0%0.0%
Basic Materials0.0%3.74%

The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

IAU is 0.00% less exposed to the Technology sector than PFF (0.0% vs 0.0%). IAU’s exposure to Industrials and Energy stocks is 10.27% lower and 0.00% lower respectively (0.0% vs. 10.27% and 0.0% vs. 0.0%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 0.65% less of the fund’s holdings compared to PFF (0.00% vs. 0.65%).

Holdings

IAU - Holdings

IAU HoldingsWeight
Gold100.0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

PFF - Holdings

PFF HoldingsWeight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A2.54%
BlackRock Cash Funds Treasury SL Agency2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-1.49%
ArcelorMittal S.A. 5.5%1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B1.14%
NextEra Energy Inc Unit1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.41.08%
Avantor Inc Ser A0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Risk Analysis

IAUPFF
Mean Return0.230.52
R-squared16.039.39
Std. Deviation16.977.87
Alpha4.163.45
Beta0.480.81
Sharpe Ratio0.130.72
Treynor Ratio1.56.79

The iShares Gold Trust (IAU) has a Mean Return of 0.23 with a Treynor Ratio of 1.5 and a Sharpe Ratio of 0.13. Its R-squared is 16.03 while IAU’s Alpha is 4.16. Furthermore, the fund has a Standard Deviation of 16.97 and a Beta of 0.48.

The iShares Preferred and Income Securities ETF (PFF) has a Alpha of 3.45 with a Beta of 0.81 and a R-squared of 9.39. Its Treynor Ratio is 6.79 while PFF’s Mean Return is 0.52. Furthermore, the fund has a Sharpe Ratio of 0.72 and a Standard Deviation of 7.87.

IAU’s Mean Return is 0.29 points lower than that of PFF and its R-squared is 6.64 points higher. With a Standard Deviation of 16.97, IAU is slightly more volatile than PFF. The Alpha and Beta of IAU are 0.71 points higher and 0.33 points lower than PFF’s Alpha and Beta.

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Performance

Annual Returns

IAU vs. PFF - Annual Returns

YearIAUPFF
202023.86%7.94%
201918.54%15.62%
2018-1.39%-4.77%
201711.58%8.33%
20168.85%1.26%
2015-11.65%4.62%
2014-0.44%13.45%
2013-27.96%-0.59%
20128.37%18.25%
20118.66%-2.2%
201027.93%13.96%

IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% respectively.

The year 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

IAU vs. PFF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IAU$10,000$16,7866.03%
PFF$10,000$20,2726.90%

A $10,000 investment in IAU would have resulted in a final balance of $16,786. This is a profit of $6,786 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

With a $10,000 investment in PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.

IAU’s CAGR is 0.87 percentage points lower than that of PFF and as a result, would have yielded $3,486 less on a $10,000 investment. Thus, IAU performed worse than PFF by 0.87% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.