BlackRock Asset Management Canada Ltd. is now providing investors with a new income-oriented product, featuring a consistent distribution schedule, with the launch of the iShares S&P/TSX North American Preferred Stock Index Fund (CAD-Hedged) (TSX:XPF).

XPF began trading on the Toronto Stock Exchange Monday.

XPF will provide investors with geographically diversified exposure to preferred shares by investing a portion of its assets in U.S. preferred shares and a portion in Canadian preferred shares. XPF will hedge its currency exposure to the U.S. dollar, and carry a management fee of 0.45% per year.

“Preferred stock generally has higher yields than common stock, the bond market and the money market, but is less risky than equity, making XPF a useful asset for boosting income in a risk-controlled fashion,” says Oliver McMahon, director of product management for iShares ETFs at BlackRock Canada.

“XPF offers all the benefits that investors have come to expect from iShares ETFs, including reasonable management fees, full intra-day trading capability, and the power of the iShares ETFs’ unique and trusted product engineering.”

The S&P/TSX North American Preferred Stock Canadian Dollar Hedged Index (Index), which is the underlying index for XPF, currently includes 226 U.S. securities and 119 Canadian securities for a total of 345 securities (as of Oct 31, 2010).

Combining the two markets allows investors to take advantage of the breadth of the U.S. preferred share market, which also currently yields significantly more than the Canadian market, while maintaining the benefits of Canadian preferred stock exposure, BlackRock Canada explains. This approach also results in a better diversified portfolio and lower single-issuer risk, as the Canadian preferred share market is relatively small and concentrated when compared to the U.S.

XPF will hold a U.S. iShares Fund to represent the U.S. portion of the Index, and hedge U.S. dollar currency exposure.

IE