The iShares Preferred and Income Securities ETF (PFF) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. PFF is a iShares Preferred Stock fund and VLUE is a iShares Large Value fund. So, what’s the difference between PFF and VLUE? And which fund is better?
The expense ratio of PFF is 0.31 percentage points higher than VLUE’s (0.46% vs. 0.15%). PFF also has a higher exposure to the utilities sector and a higher standard deviation. Overall, PFF has provided lower returns than VLUE over the past 7 years.
In this article, we’ll compare PFF vs. VLUE. We’ll look at performance and portfolio growth, as well as at their holdings and risk metrics. Moreover, I’ll also discuss PFF’s and VLUE’s annual returns, industry exposure, and fund composition and examine how these affect their overall returns.
Summary
| PFF | VLUE | |
| Name | iShares Preferred and Income Securities ETF | iShares MSCI USA Value Factor ETF |
| Category | Preferred Stock | Large Value |
| Issuer | iShares | iShares |
| AUM | 19.8B | 15.95B |
| Avg. Return | 6.90% | 8.91% |
| Div. Yield | 4.47% | 1.89% |
| Expense Ratio | 0.46% | 0.15% |
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%.
The iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
PFF’s dividend yield is 2.58% higher than that of VLUE (4.47% vs. 1.89%). Also, PFF yielded on average 2.01% less per year over the past decade (6.90% vs. 8.91%). The expense ratio of PFF is 0.31 percentage points higher than VLUE’s (0.46% vs. 0.15%).
Fund Composition
Industry Exposure
| PFF | VLUE | |
| Technology | 0.0% | 26.89% |
| Industrials | 10.27% | 9.14% |
| Energy | 0.0% | 2.42% |
| Communication Services | 0.0% | 10.39% |
| Utilities | 81.81% | 2.68% |
| Healthcare | 3.54% | 14.31% |
| Consumer Defensive | 0.0% | 7.22% |
| Real Estate | 0.65% | 3.19% |
| Financial Services | 0.0% | 10.96% |
| Consumer Cyclical | 0.0% | 10.66% |
| Basic Materials | 3.74% | 2.14% |
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%.
The iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
PFF is 79.13% more exposed to the Utilities sector than VLUE (81.81% vs 2.68%). PFF’s exposure to Industrials and Basic Materials stocks is 1.13% higher and 1.60% higher respectively (10.27% vs. 9.14% and 3.74% vs. 2.14%). In total, Financial Services, Consumer Defensive, and Communication Services also make up 28.57% less of the fund’s holdings compared to VLUE (0.00% vs. 28.57%).
Holdings
| PFF Holdings | Weight |
| Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A | 2.54% |
| BlackRock Cash Funds Treasury SL Agency | 2.3% |
| 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 A | 1.35% |
| Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B | 1.14% |
| NextEra Energy Inc Unit | 1.12% |
| Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 | 1.08% |
| Avantor Inc Ser A | 0.99% |
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%.
| VLUE Holdings | Weight |
| AT&T Inc | 7.13% |
| Intel Corp | 6.14% |
| General Motors Co | 3.19% |
| Micron Technology Inc | 3.14% |
| Cisco Systems Inc | 3.05% |
| International Business Machines Corp | 2.76% |
| Target Corp | 2.38% |
| Citigroup Inc | 2.32% |
| Ford Motor Co | 2.23% |
| Pfizer Inc | 2.17% |
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
Risk Analysis
| PFF | VLUE | |
| Mean Return | 0.52 | 0 |
| R-squared | 9.39 | 0 |
| Std. Deviation | 7.87 | 0 |
| Alpha | 3.45 | 0 |
| Beta | 0.81 | 0 |
| Sharpe Ratio | 0.72 | 0 |
| Treynor Ratio | 6.79 | 0 |
The iShares Preferred and Income Securities ETF (PFF) has a Standard Deviation of 7.87 with a Treynor Ratio of 6.79 and a Mean Return of 0.52. Its Alpha is 3.45 while PFF’s Beta is 0.81. Furthermore, the fund has a Sharpe Ratio of 0.72 and a R-squared of 9.39.
The iShares MSCI USA Value Factor ETF (VLUE) has a Treynor Ratio of 0 with a R-squared of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while VLUE’s Alpha is 0. Furthermore, the fund has a Beta of 0 and a Standard Deviation of 0.
PFF’s Mean Return is 0.52 points higher than that of VLUE and its R-squared is 9.39 points higher. With a Standard Deviation of 7.87, PFF is slightly more volatile than VLUE. The Alpha and Beta of PFF are 3.45 points higher and 0.81 points higher than VLUE’s Alpha and Beta.
Performance
Annual Returns
| Year | PFF | VLUE |
| 2020 | 7.94% | -0.32% |
| 2019 | 15.62% | 27.47% |
| 2018 | -4.77% | -11.18% |
| 2017 | 8.33% | 21.97% |
| 2016 | 1.26% | 15.68% |
| 2015 | 4.62% | -3.54% |
| 2014 | 13.45% | 12.29% |
| 2013 | -0.59% | 0.0% |
| 2012 | 18.25% | 0.0% |
| 2011 | -2.2% | 0.0% |
| 2010 | 13.96% | 0.0% |
PFF had its best year in 2012 with an annual return of 18.25%. PFF’s worst year over the past decade yielded -4.77% and occurred in 2018. In most years the iShares Preferred and Income Securities ETF provided moderate returns such as in 2015, 2020, and 2017 where annual returns amounted to 4.62%, 7.94%, and 8.33% respectively.
The year 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| PFF | $10,000 | $15,473 | 6.90% |
| VLUE | $10,000 | $17,247 | 8.91% |
A $10,000 investment in PFF would have resulted in a final balance of $15,473. This is a profit of $5,473 over 7 years and amounts to a compound annual growth rate (CAGR) of 6.90%.
With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.
PFF’s CAGR is 2.01 percentage points lower than that of VLUE and as a result, would have yielded $1,774 less on a $10,000 investment. Thus, PFF performed worse than VLUE by 2.01% annually.
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