VRP holds a portfolio of USD denominated floating- and variable-rate preferred stocks or hybrid securities with similar characteristics. Floating-rate preferreds link dividends to a reference benchmark rate plus a fixed spread. Variable rate preferreds have a fixed dividend initially for a period of time, but later will turn into a floating-rate structure. VRP is the first of its kind: an ETF that combines exposure to both types. The self-adjusting nature of the dividends mitigates duration risk, so VRP can be a viable addition to an income portfolio to position for rising rates. VRP may invest in investment grade and non-investment grade securities. Rebalancing is done monthly. Prior to June 30, 2021, the fund tracked the Wells Fargo Hybrid and Preferred Securities Floating and Variable Rate Index.
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