iShares launches S&P International Preferred Stock ETF

Nov 18th, 2011 | By | Category: Alternatives / Multi-Asset

BlackRock has launched the iShares S&P International Preferred Stock Index Fund on the NYSE Arca. The fund is the first ETF that offers access to local currency, preferred securities that are offered in developed markets outside the US.

The new ETF joins its US-focused counterpart, the iShares S&P US Preferred Stock Index Fund, which has over $7bn in AUM.

iShares launches International Preferred Stock ETF

Preferred securities (also known as preference shares) are income generating securities that rank senior to ordinary common stock but subordinate to bonds.

International preferred securities (also known as preference shares) – income generating securities that are senior to common stock but subordinate to fixed income – can be a compelling investment alternative for investors who are seeking to diversify internationally and reduce exposure to their domestic currency.

“Income-seeking investors are starved for yield opportunities, but traditional income sources today are offering historically low yields,” said Darek Wojnar, Head of iShares Product Development at BlackRock. “At the same time, it’s been challenging for investors to easily tap into potentially attractive income sources beyond their home markets.”

“Our international preferred stock ETF is designed to uniquely address this need, giving investors ready access to a diversified basket of preferred securities in tandem with the benefits of non-US country and currency exposures,” he said.

The iShares S&P International Preferred Stock ETF is benchmarked to the S&P International Preferred Stock Index, a market-cap weighted, quarterly rebalanced index. The top country weights are currently Canada, followed by the UK and New Zealand.

“Canada, in particular, is drawing increasing investor notice as one of a group of relatively smaller, developed countries that are less burdened by debt and structural deficits, and that also enjoy better growth prospects than the larger developed nations,” Wojnar said. “The new iShares International Preferred Stock ETF is a highly flexible approach for adding exposure to such markets with an associated diversification benefit.”

One potential downside investors should be aware of is the fund’s heavy tilt towards financials, a common trait among preferred securities. Indeed, the largest country and sector representation is Canadian Financials at 59% of market capitalization.

Tags: ,

Leave a Comment



More in Alternatives / Multi-Asset
SPDR ETFs: Four principles for building your core portfolio
SPDR ETFs: Four principles for building your core portfolio

By Matthew J. Bartolini, head of SPDR Americas research, State Street Global Advisors. A strong, flexible portfolio depends heavily on how assets are...

Bermstein: Exponential rise in indices spells death of benchmarking
IndexIQ cuts fees for hedge fund ETF

IndexIQ has reduced the management fee charged for its IQ Hedge Multi-Strategy Tracker ETF (NYSE Arca: QIA) from 0.75% to 0.53%. Including the...

Close