The biggest ETF in the category is the iShares preferred fund, which yields 6.0% and has $11.4 billion in assets. During the past five years, the iShares fund returned 5.2% annually. A new choice is Market Vectors Preferred Securities ex Financials ( PFXF), which aims to attract investors who are concerned about the risks of financials. The fund has 30% of assets in REITs and 24% in electric utilities. Big holdings include issues from industrial companies, such as General Motors ( GM), United Technologies ( UTX), and Stanley Black & Decker ( SWK). The fund's benchmark yields about as much as competing choices. But Market Vectors says that in the past the benchmark has been less volatile than competitors that are heavy with financial names. For investors seeking to diversify portfolios, an intriguing new choice is First Trust Multi-Asset Diversified Income Index ( MDIV), which yields 5.5%. The fund has 20% of assets in preferreds. The rest of the assets are spread among different kinds of income investments that do not necessarily track bonds. The portfolio holds 20% of assets in REITs, 20% in master limited partnerships, and 25% in dividend-paying stocks. The fund rebalances every quarter, automatically selling high-priced winners and buying depressed sectors. If rates rise, the multi-asset fund could be hurt, but it would likely outdo bonds. "The fund aims to generate income without taking a lot of interest rate risk," says Ryan Issakainen, ETF strategist for First Trust Advisors. Follow @StanLuxenbergThis article was written by an independent contributor, separate from TheStreet's regular news coverage.