Virtus InfraCap Preferred Stock ETF offers high yield via leverage but risks big losses in downturns.

Virtus InfraCap U.S. Preferred Stock ETF (PFFA) delivers a high distribution yield of 9.67% by using leverage, borrowing up to 33.3% of assets to buy more preferred shares. While this strategy boosts returns in stable markets, it also increases risk, as seen in the 2020 market crash when PFFA lost over 50%, far more than unleveraged peers. The fund’s higher expenses and potential for distribution cuts during credit stress make it suitable mainly for investors who accept equity-like volatility and hold it in tax-advantaged accounts. Investors should weigh the tradeoff between higher yield and the risk of significant drawdowns before investing.