BlackRock Asset Management Canada Ltd. Monday announced the launch of the new iShares DEX Floating Rate Note Index Fund with a commitment to waive its management fees until June 30, 2012.

The fund (TSX:XFR) seeks to generate income and limit potential interest rate risk by investing in a regularly rebalanced portfolio of floating-rate bonds. The fund has closed the initial offering of its units and began trading on the Toronto Stock Exchange Monday.

“Markets are volatile. Investors’ appetite for risk is low but they still want to maximize yield,” says Mary Anne Wiley, managing director, head of iShares distribution at BlackRock Canada. “Our new fund is designed to capture yield in low duration securities while managing interest rate risk. As a special initiative, BlackRock Canada will not be charging any management fees for the next six months so investors can feel comfortable putting their cash to work in a product that is designed to deliver both income and stability.”

The fund seeks to provide income by replicating, to the extent possible, the performance of the DEX FRN index, net of expenses. Floating-rate notes are generally subject to less interest rate risk than fixed-rate bonds of similar maturity and quality and may therefore be used to help investors insulate their portfolios, and earn progressively higher income, in a rising interest rate environment. With a management fee of 0.20% (after the expiry of the management fee waiver on June 30, 2012), the fund gives access to a diversified bond portfolio and offers an alternative to cash. XFR’s expected income distribution frequency is monthly.

XFR brings the iShares suite of fixed income products offered by BlackRock Canada to 12 which cover many slices of the Canadian bond universe complemented with U.S. and international fixed income exposures.

There are currently $6.9 billion of assets under management in the TSX-listed iShares fixed income ETF suite.