PREF vs SPY
Principal Spectrum Preferred Securities Active ETF vs State Street SPDR S&P 500 ETF Trust
Quick Verdict
SPY has a lower expense ratio. SPY delivered stronger 1-year returns. SPY offers more diversification with 503 holdings.
Side-by-Side Comparison
| Metric | PREF | SPY | Winner |
|---|---|---|---|
| Expense Ratio | 0.55% | 0.09% | |
| AUM | $1.8B | $789.1B | |
| Dividend Yield | 5.13% | 1.01% | |
| Holdings | 153 | 505 | |
| YTD Return | +1.43% | +13.79% | |
| 1Y Return | +4.77% | +23.66% | |
| 3Y Return (annualized) | +8.16% | +21.40% | |
| 5Y Return (annualized) | +2.65% | +13.37% | |
| Volatility (annualized) | 7.8% | 15.3% | |
| Max Drawdown | -23.3% | -56.5% | |
| Fund Family | Principal Funds | State Street Investment Management | |
| Category | Allocation/Balanced | Equity | |
| Inception | Jul 10, 2017 | Jan 22, 1993 |
PREF vs SPY Performance
Principal Spectrum Preferred Securities Active ETF (PREF) is a ETF from Principal Funds and State Street SPDR S&P 500 ETF Trust (SPY) is a ETF from State Street Investment Management. Over the past year PREF returned +4.77% while SPY returned +23.66%. Year to date, PREF is up 1.43% versus a gain of 13.79% for SPY.
Over three years, PREF compounded at +8.16% per year against +21.40% for SPY; over five years the annualized figures are +2.65% and +13.37% respectively. Across the full 9-year window we track, SPY has the edge at +8.85% annualized vs +2.07%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
SPY has been the more volatile fund, with annualized monthly volatility of 15.3% compared with 7.8% for PREF. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -23.3% for PREF and -56.5% for SPY. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.73. They usually move together, but the gap leaves some room for diversification.
Fees and Cost Over Time
PREF charges 0.55% per year while SPY charges 0.09%. On a $10,000 position that is $55 vs $9 annually, a gap of $46 per year that compounds over a long holding period. On income, PREF currently yields 5.13% against 1.01% for SPY.
Holdings Overlap
Frequently Asked Questions
Which is cheaper, PREF or SPY?
PREF has an expense ratio of 0.55% while SPY charges 0.09%. SPY is the cheaper option. On a $10,000 investment, that is $46 per year of difference.
Which performed better, PREF or SPY?
Over the past year PREF returned +4.77% vs +23.66% for SPY, so SPY leads on 1-year performance. Over the longest common window we track (9 years), PREF annualized +2.07% vs +8.85% for SPY. Past performance does not guarantee future results.
Which is riskier, PREF or SPY?
SPY has been the more volatile fund at 15.3% annualized versus 7.8% for PREF. Worst drawdown: PREF -23.3% vs SPY -56.5%.
Should I hold both PREF and SPY?
PREF and SPY have a monthly-return correlation of 0.73, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between PREF and SPY?
PREF and SPY share 2 common holdings with a 0.2% weight overlap. Combined, they hold 614 unique securities.
Which pays a higher dividend, PREF or SPY?
PREF yields 5.13% while SPY yields 1.01%, so PREF currently pays the higher dividend yield.
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