NEW YORK ( Fabian Capital Management) -- Preferred stocks have always been an interesting animal. These income beasts are known for being a hybrid between a stock and a bond that pay phenomenal dividends to shareholders. Over the last several years, these dividend machines have been pumping out annual yields anywhere between 5%-6% with low volatility and excellent capital appreciation.However, the latest bump in the road for preferred stocks has been the vertical ascent of interest rates that began in May of this year. The prices of preferred stocks typically fluctuate with interest rates, similar to bond prices, but they can also be subject to equity-like price characteristics. The leap in the 10-Year Treasury Note Yield from a low of 1.65% to a high of 2.78% represents an increase of more than 68% in just four short months. This has resulted in nearly every preferred stock ETF on my watch list getting pummeled and most are sitting at or near their 52-week lows. The following are the most popular preferred stock ETFs and the percentage off their highs: iShares U.S. Preferred Stock ETF ( PFF) -7.27% PowerShares Preferred Portfolio ( PGX) -8.67% MarketVectors Preferred Securities ex-Financials ETF ( PFXF) -8.03% First Trust Preferred Securities and Income ETF ( FPE) -11.35% iShares International Preferred Stock ETF ( IPFF) -10.68% The best of the bunch is clearly PFF which is the largest preferred stock ETF by assets. The fund holds a whopping $10 billion in assets spread among 323 holdings. The overwhelming majority of the sector allocation in PFF is focused in the financial arena with real estate and utilities making up a smaller subset. The current 30-day SEC yield is 5.66% and the expense ratio is 0.47%.