PSQO vs. FAAR

Last updated Jun 23, 2026

PSQO (Palmer Square Credit Opportunities ETF) and FAAR (First Trust Alternative Absolute Return Strategy ETF) are both exchange-traded funds - PSQO is a Multisector Bonds fund actively managed by Palmer Square, while FAAR is a Commodities fund actively managed by First Trust. Both are actively managed. Over the past year, PSQO returned 5.67% vs 26.86% for FAAR. At a correlation of -0.09, they often move in opposite directions. PSQO charges 0.52%/yr vs 0.95%/yr for FAAR.

Performance

PSQO vs. FAAR - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Palmer Square Credit Opportunities ETF (PSQO) and First Trust Alternative Absolute Return Strategy ETF (FAAR). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, PSQO achieves a 1.85% return, which is significantly lower than FAAR's 20.23% return.

PSQO

• 1D: -0.07%
• 1M: 0.46%
• YTD: 1.85%
• 6M: 2.07%
• 1Y: 5.67%
• 3Y*: —
• 5Y*: —
• 10Y*: —

FAAR

• 1D: -0.05%
• 1M: -4.34%
• YTD: 20.23%
• 6M: 19.92%
• 1Y: 26.86%
• 3Y*: 10.91%
• 5Y*: 7.89%
• 10Y*: 4.79%

*Multi-year figures are annualized to reflect compound growth (CAGR)

PSQO vs. FAAR - Yearly Performance Comparison

	2026 (YTD)	2025	2024
PSQO Palmer Square Credit Opportunities ETF	1.85%	7.05%	1.96%
FAAR First Trust Alternative Absolute Return Strategy ETF	20.23%	8.07%	1.38%

Correlation

The correlation between PSQO and FAAR is -0.16, meaning they tend to move in opposite directions. This is especially valuable for risk management - when one declines, the other has historically tended to hold steady or rise.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	-0.16
Correlation (All Time) Calculated using the full available price history since Sep 12, 2024	-0.09

Return for Risk

PSQO vs. FAAR — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

PSQO

PSQO Risk / Return Rank: 96
PSQO Sharpe Ratio Rank: 95
PSQO Sortino Ratio Rank: 97
PSQO Omega Ratio Rank: 97
PSQO Calmar Ratio Rank: 96
PSQO Martin Ratio Rank: 96

FAAR

FAAR Risk / Return Rank: 70
FAAR Sharpe Ratio Rank: 64
FAAR Sortino Ratio Rank: 65
FAAR Omega Ratio Rank: 58
FAAR Calmar Ratio Rank: 87
FAAR Martin Ratio Rank: 78

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

PSQO vs. FAAR - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Palmer Square Credit Opportunities ETF (PSQO) and First Trust Alternative Absolute Return Strategy ETF (FAAR). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

Values are calculated on a 1-year rolling basis and updated daily. Risk-adjusted metrics are more stable over longer periods — use the period switch above to explore them.

	PSQO	FAAR	Difference
Sharpe ratio: Return per unit of total volatility	3.70	2.02	+1.67
Sortino ratio: Return per unit of downside risk	6.36	2.89	+3.47
Omega ratio: Gain probability vs. loss probability	1.85	1.35	+0.51
Calmar ratio: Return relative to maximum drawdown	8.61	4.75	+3.86
Martin ratio: Return relative to average drawdown	35.14	14.70	+20.44

PSQO vs. FAAR - Sharpe Ratio Comparison

The current PSQO Sharpe Ratio is 3.70, which is higher than the FAAR Sharpe Ratio of 2.02. The chart below compares the historical Sharpe Ratios of PSQO and FAAR, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Drawdowns

PSQO vs. FAAR - Drawdown Comparison

The maximum PSQO drawdown since its inception was -0.76%, smaller than the maximum FAAR drawdown of -18.03%. Use the drawdown chart below to compare losses from any high point for PSQO and FAAR.

Drawdown Indicators

	PSQO	FAAR	Difference
Max Drawdown Largest peak-to-trough decline	-0.76%	-18.03%	+17.27%
Max Drawdown (1Y) Largest decline over 1 year	-0.66%	-5.68%	+5.02%
Max Drawdown (3Y) Largest decline over 3 years	—	-11.54%	—
Max Drawdown (5Y) Largest decline over 5 years	—	-18.03%	—
Max Drawdown (10Y) Largest decline over 10 years	—	-18.03%	—
Current Drawdown Current decline from peak	-0.07%	-5.43%	+5.36%
Average Drawdown Average peak-to-trough decline	-0.11%	-7.82%	+7.71%
Ulcer Index Depth and duration of drawdowns from previous peaks	0.16%	1.89%	-1.73%

Volatility

PSQO vs. FAAR - Volatility Comparison

The current volatility for Palmer Square Credit Opportunities ETF (PSQO) is 0.41%, while First Trust Alternative Absolute Return Strategy ETF (FAAR) has a volatility of 2.47%. This indicates that PSQO experiences smaller price fluctuations and is considered to be less risky than FAAR based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	PSQO	FAAR	Difference
Volatility (1M) Calculated over the trailing 1-month period	0.41%	2.47%	-2.06%
Volatility (6M) Calculated over the trailing 6-month period	1.21%	9.68%	-8.47%
Volatility (1Y) Calculated over the trailing 1-year period	1.54%	13.37%	-11.83%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	1.98%	12.95%	-10.97%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	1.98%	11.53%	-9.55%

PSQO vs. FAAR - Expense Ratio Comparison

PSQO has a 0.52% expense ratio, which is lower than FAAR's 0.95% expense ratio.

Dividends

PSQO vs. FAAR - Dividend Comparison

PSQO's dividend yield for the trailing twelve months is around 4.12%, less than FAAR's 9.57% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017
FAAR First Trust Alternative Absolute Return Strategy ETF	9.57%	11.63%	3.45%	3.20%	5.82%	6.49%	3.05%	1.02%	0.58%	2.83%
PSQO Palmer Square Credit Opportunities ETF	4.12%	4.45%	1.40%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%

Frequently Asked Questions

Can I hold both PSQO and FAAR in my portfolio?

PSQO and FAAR have a correlation of -0.16, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, PSQO or FAAR?

FAAR has higher volatility (2.47%) compared to PSQO (0.41%). In terms of maximum drawdown, PSQO dropped -0.76% vs FAAR's -18.03%.

Which ETF is better, PSQO or FAAR?

On 1-year performance, FAAR leads with 26.86% vs 5.67% for PSQO. On fees, PSQO is cheaper at 0.52% per year. On volatility, PSQO has been the lower-risk option at 0.41%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, PSQO or FAAR?

Over the 1-year period, FAAR has performed better with a 26.86% return vs 5.67%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, PSQO or FAAR?

PSQO is cheaper with a 0.52% expense ratio, compared with 0.95% for FAAR.

Which ETF pays a higher dividend yield, PSQO or FAAR?

FAAR has the higher dividend yield at 9.57%, compared with 4.12% for PSQO.

What is the main difference between PSQO and FAAR?

PSQO is categorized as Multisector Bonds, while FAAR is Commodities. They also come from different issuers: Palmer Square and First Trust. Their fees differ too: 0.52% for PSQO and 0.95% for FAAR.

Which has better risk-adjusted returns?

PSQO currently has the higher Sharpe Ratio (3.70 vs 2.02), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.