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POWERSHARES FINANCIAL PREFERRED PORTFOLI (PGF)

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The ETF offers both substantial yields and the opportunity for capital appreciation. It is less volatile than equities, and not as popular as the other high yielding products like MLPs or REITs. The return of PGF is highly dependent on the performance of the financial sector that has been impressive this year. Investing in a preferred equity ETF is a risky choice as the product behaves like a bond ETF as far as interest rate risk is concerned. The product will likely fall in the event of rising interest rates. Unlike bond prices, the ETF is also sensitive to downward changes in interest rates. If interest rates fall, issuers have the option to call preferred shares and reissue those at lower rates, thereby impacting the performance of the fund.


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