The SPDR S&P 500 ETF Trust (SPY) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. SPY is a SPDR State Street Global Advisors Large Blend fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between SPY and PFF? And which fund is better?
The expense ratio of SPY is 0.37 percentage points lower than PFF’s (0.09% vs. 0.46%). SPY also has a higher exposure to the technology sector and a higher standard deviation. Overall, SPY has provided lower returns than PFF over the past ten years.
In this article, we’ll compare SPY vs. PFF. We’ll look at holdings and industry exposure, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss SPY’s and PFF’s performance, portfolio growth, and annual returns and examine how these affect their overall returns.
Also see SPY vs. TQQQ for another great set of funds to own.
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|Name||SPDR S&P 500 ETF Trust||iShares Preferred and Income Securities ETF|
|Category||Large Blend||Preferred Stock|
|Issuer||SPDR State Street Global Advisors||iShares|
The SPDR S&P 500 ETF Trust (SPY) is a Large Blend fund that is issued by SPDR State Street Global Advisors. It currently has 374.03B total assets under management and has yielded an average annual return of 14.41% over the past 10 years. The fund has a dividend yield of 1.3% with an expense ratio of 0.09%.
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%.
Another great SPY comparison is SPY vs. TIP.
SPY’s dividend yield is 3.17% lower than that of PFF (1.3% vs. 4.47%). Also, SPY yielded on average 7.51% more per year over the past decade (14.41% vs. 6.90%). The expense ratio of SPY is 0.37 percentage points lower than PFF’s (0.09% vs. 0.46%).
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The SPDR S&P 500 ETF Trust (SPY) has the most exposure to the Technology sector at 24.22%. This is followed by Financial Services and Healthcare at 14.23% and 13.09% respectively. Utilities (2.45%), Real Estate (2.57%), and Energy (2.86%) only make up 7.88% of the fund’s total assets.
SPY’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 6.32%, 8.86%, 11.14%, 12.0%, and 13.09%.
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%.
SPY is 24.22% more exposed to the Technology sector than PFF (24.22% vs 0.0%). SPY’s exposure to Financial Services and Healthcare stocks is 14.23% higher and 9.55% higher respectively (14.23% vs. 0.0% and 13.09% vs. 3.54%). In total, Utilities, Real Estate, and Energy also make up 74.58% less of the fund’s holdings compared to PFF (7.88%; vs. 82.46%;).
|Facebook Inc A||2.29%|
|Alphabet Inc A||2.02%|
|Alphabet Inc Class C||1.96%|
|Berkshire Hathaway Inc Class B||1.45%|
|JPMorgan Chase & Co||1.29%|
SPY’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.9%, 5.6%, 4.05%, 2.29%, and 2.02%.
Alphabet Inc Class C (1.96%), Berkshire Hathaway Inc Class B (1.45%), and Tesla Inc (1.44%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SPY’s holdings at 1.37% and 1.29%.
If you still want to see how SPY stack up to other competition check out SPY v. ARKK.
|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%.
The SPDR S&P 500 ETF Trust (SPY) has a Beta of 1 with a R-squared of 100 and a Treynor Ratio of 14.12. Its Sharpe Ratio is 1.04 while SPY’s Standard Deviation is 13.56. Furthermore, the fund has a Mean Return of 1.23 and a Alpha of -0.09.
The iShares Preferred and Income Securities ETF (PFF) has a Mean Return of 0.52 with a R-squared of 9.39 and a Sharpe Ratio of 0.72. Its Alpha is 3.45 while PFF’s Treynor Ratio is 6.79. Furthermore, the fund has a Beta of 0.81 and a Standard Deviation of 7.87.
I have a related article on SPY vs. MUB that has a lot of similar break downs.
SPY’s Mean Return is 0.71 points higher than that of PFF and its R-squared is 90.61 points higher. With a Standard Deviation of 13.56, SPY is slightly more volatile than PFF. The Alpha and Beta of SPY are 3.54 points lower and 0.19 points higher than PFF’s Alpha and Beta.
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SPY had its best year in 2013 with an annual return of 32.21%. SPY’s worst year over the past decade yielded -4.45% and occurred in 2018. In most years the SPDR S&P 500 ETF Trust provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.53%, 14.93%, and 15.84% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SPY would have resulted in a final balance of $41,712. This is a profit of $31,712 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.41%.
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%.
See SPY vs. XFL if you want to add more ETF’s to your portfolio.
SPY’s CAGR is 0.00 percentage points lower than that of PFF and as a result, would have yielded $21,440 more on a $10,000 investment. Thus, SPY performed worse than PFF by 0.00% annually.
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