ETF that offers access to local currency, preferred securities that are offered in developed markets outside the US.
The new ETF joins its U.S. focused counterpart, the iShares S&P U.S. Preferred Stock Index Fund (NYSEArca:PFF), which had $7.2 Billion in Assets Under Management (AUM)1.
Compelling Income Alternative
International preferred securities — 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 outside of the U.S. and away from the U.S. dollar.
“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-U.S. country and currency exposures,” he said.
Access to Attractive Country Markets
The iShares S&P International Preferred Stock ETF provides investors an opportunity to participate in several of today’s most attractive country markets, as part of its access to the non-U.S. preferred securities category. The fund is benchmarked to the S&P International Preferred Stock Index, a market-cap weighted, quarterly rebalanced index. The top country weights are Canada followed by the U.K. 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.”
The index has a heavy tilt towards financials, a common trait among preferred securities. The largest country and sector representation is Canadian Financials at 59% of market capitalization.
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At September 30, 2011, BlackRock’s AUM was $3.345 trillion. BlackRock offers products that span the risk spectrum to meet clients’ needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of September 30, 2011, the firm has approximately 10,200 employees in 27 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia, and the Middle East and Africa. For additional information, please visit the Company’s website at www.blackrock.com.
iShares is the global product leader in exchange traded funds with over 460 funds globally across equities, fixed income and commodities, which trade on 19 exchanges worldwide. The iShares Funds are bought and sold like common stocks on securities exchanges. The iShares Funds are attractive to many individual and institutional investors and financial intermediaries because of their relative low cost, tax efficiency and trading flexibility. Investors can purchase and sell shares through any brokerage firm, financial advisor, or online broker, and hold the funds in any type of brokerage account. The iShares customer base consists of the institutional segment of pension plans and fund managers, as well as the retail segment of financial advisors and high net worth individuals.
Carefully consider the funds’ investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the funds’ prospectuses, which may be obtained by calling 1-800-iShares (1-800-474-2737) or by visiting www.iShares.com. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal. Diversification may not protect against market risk. Index constituents are subject to change.
In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Narrowly focused investments typically exhibit higher volatility. Preferred stocks are not necessarily correlated with securities markets generally. Rising interest rates may cause the value of the Fund’s investments to decline significantly. Payment of dividends is not guaranteed. Removal of stocks from the index due to maturity, redemption, call features or conversion may cause a decrease in the yield of the index and the Fund.
Transactions in shares of the iShares Funds will result in brokerage commissions and will generate tax consequences. iShares Funds are obliged to distribute portfolio gains to shareholders. Shares of the iShares Funds may be sold throughout the day on the exchange through any brokerage account. However, shares may only be redeemed directly from a Fund by Authorized Participants, in very large creation/redemption units. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained.
The iShares Funds (“Funds”) are distributed by SEI Investments Distribution Co. (“SEI”). BlackRock Fund Advisors (“BFA”) serves as the investment advisor to the Funds. BlackRock Fund Distribution Company (“BFDC”) assists in the marketing of the Funds. BFA and BFDC are affiliates of BlackRock, Inc., none of which is affiliated with SEI.
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Standard & Poor’s, nor does this company make any representation regarding the advisability of investing in the Funds. Neither SEI, nor BlackRock Institutional Trust Company, N.A., nor any of their affiliates, are affiliated with the company listed above.
* Not FDIC Insured * No Bank Guarantee * May Lose Value
1 Source: BlackRock, as of November 15, 2011.