BlackRock Canada Launches the iShares Short Term Strategic Fixed Income ETF (XSI), Designed to Minimize Interest Rate Volatility While Maximizing Yield

TORONTO, ONTARIO--(Marketwired - Jan. 26, 2015) - (TSX:XSI) - iShares, the industry-leading exchange traded fund (ETF) business at BlackRock Asset Management Canada Limited (BlackRock Canada), an indirect, wholly-owned subsidiary of BlackRock, Inc. (BlackRock), announced the launch of a new iShares fund that seeks to generate income for unitholders by investing primarily in securities of one or more iShares ETFs that provide exposure to global fixed income securities, including government bonds, investment grade corporate bonds, high yield securities, emerging market debt and other types of fixed income investments. Exposure to these types of fixed income investments may also be obtained by investing directly in them and/or through the use of derivatives.In constructing the portfolio of iShares Short Term Strategic Fixed Income ETF (XSI), BlackRock Canada intends to limit its exposure to interest rate risk by limiting average portfolio duration to five years or less. XSI has an annual management fee of 0.50%. XSI has now closed the initial offering of its units which will be available for trading on the TSX when the market opens today.

"With investors facing historically low yields and long duration in the broad Canadian bond universe - XSI brings to market BlackRock's global capabilities to provide a fixed income solution that controls both overall risk and specifically volatility in interest rates, yet meeting the income needs of investors," said Pat Chiefalo, Managing Director, Head of Product for BlackRock Canada's iShares business. "As a multi-ETF vehicle, XSI brings the best of BlackRock's global iShares platform to Canadian investors to help them in their search for yield."

Rethink Your Bonds: Mitigating Interest Rate Risk in a Divergent Fixed Income World

XSI has been designed in response to the evolving landscape facing fixed income investors today. For several years, central banks around the world have kept fixed income yields low, but the average duration of bonds - the time it takes for the price of a bond to be repaid - has risen, driven by governments that have lengthened the maturity date of their debt instruments in order to lock in low interest rates. The result is that the spread between yield and duration is at historic highs: the average duration of the broad Canadian bond universe stands over seven years, while average yields are in the 2 to 3% range. If interest rates rise, returns from these long-duration bonds will be reduced.