BlackRock Asset Management Canada Limited (iShares)

BlackRock Asset Management Canada Limited (iShares)

February 17, 2015 07:00 ET

With the Launch of Four New Funds, BlackRock Expands the iShares Core for Canadian Investors

- The iShares Core now includes low-cost options for access to the U.S. Total Stock Market, currency-hedged developed markets and the world

- iShares also launches a new unhedged option to access dividend-paying U.S. companies

TORONTO, ONTARIO--(Marketwired - Feb. 17, 2015) - (TSX:XUU)(TSX:XAW)(TSX:XHU)(TSX:XFH)(TSX:XUH) - 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 four new funds in the iShares Core, providing even more comprehensive exposures and currency-hedging optionality to the asset classes sought most by Canadian investors today(1). In addition, iShares also announced the launch of a new fund that provides an unhedged option to dividend-paying U.S. companies, offering additional ways for Canadian investors to reach for income in an ongoing low-yield environment. XUU, XAW, XHU, XFH and XUH have now closed the initial offering of their units. The units of XUU, XAW, XHU and XFH will be listed on the TSX when the market opens today. The units of XUH are expected to be listed on the TSX when the market opens on February 19, 2015.

Strengthen the core of your portfolio. And lower your costs.

With the addition of the four new iShares Core funds, the iShares Core -- which has been a popular suite of funds among Canadian investors, capturing 30% of flows across the respective asset classes since launching in March of last year(2) -- provides additional options for investors, including the U.S. total stock market, and all-world access. With a full range of low-cost funds offering exposures to domestic stocks and bonds, U.S. and global equities, the expanded iShares Core is now a more comprehensive suite of funds giving Canadian investors more choice, market exposures and cost efficiency in building the long-term portions of their portfolios. Now by owning just three iShares Core funds - XIC (Canadian stocks), XQB (Canadian bonds) and the new XAW (Global stocks) - investors can have a diversified core portfolio at approximately 1/10th the average cost of owning a traditional global equity balanced mutual fund in Canada(3).

"The latest expansion of the iShares Core for Canadian investors comes in response to the continuing demand for low-cost, well-diversified funds to comprise core allocations in their portfolios," said Warren Collier, Managing Director, Head of iShares, BlackRock Canada. "With the market continually changing, the flexibility and currency optionality we have built into the iShares Core gives investors the ability to invest and adapt their portfolios to their individual needs while also helping them to lower their costs over the long term."

The iShares Core New Fund Additions:

Fund Name Ticker Management Fee Description
iShares Core S&P U.S. Total Market Index ETF XUU 0.10% The fund seeks to provide long-term capital growth by replicating, to the extent possible, the performance of the S&P Total Market Index net of expenses and offers broad exposure to U.S. large, mid, small, and micro capitalized companies.
iShares Core S&P U.S. Total Market Index ETF (CAD-Hedged)* XUH* 0.10% Like XUU, the fund offers broad exposure to U.S. large, mid, small, and micro capitalized companies and is 100% hedged to the Canadian dollar.
iShares Core MSCI All Country World ex Canada Index ETF (XAW) XAW 0.20% The fund seeks to provide long-term capital growth by replicating, to the extent possible, the performance of the MSCI ACWI ex Canada IMI Index net of expenses and provides access to large, mid and small cap representation across 22 developed markets countries (excluding Canada) and 23 emerging markets countries.
iShares Core MSCI EAFE IMI Index ETF (CAD-Hedged) XFH 0.20% The fund seeks to provide long-term capital growth by replicating, to the extent possible, the performance of the MSCI EAFE IMI 100% Hedged to CAD Index net of expenses and captures large, mid and small cap representation across developed markets countries around the world, excluding the US and Canada, and is 100% to the Canadian dollar.

*All funds will be available for trading on the TSX when the market opens today, except XUH, which is expected to begin trading on February 19th.

The iShares Core appeals to investors of all types. Today, more than two-thirds of institutional investors surveyed in a recent Greenwich Associates survey are using ETFs to achieve their core allocation strategies(4), and more than 50% of advisors and 43% of investors are using ETFs at the core of their portfolios. And for those that do, 41% of advisors and 45% of investors using ETFs at the core of their portfolios turn to iShares as their first choice(5).

"The success of the iShares Core has coincided with investors becoming increasingly sophisticated in the ways they use ETFs to implement their long-term strategies," said Warren Collier. "With the newly expanded iShares Core, they now have more low-cost, well-diversified options than ever before."

Capturing equity income in a low yield environment

In a low growth and low yield environment, Canadian investors are increasingly looking for ways to innovate and grow their income sources. Equity dividends can be a good place for investors to capture that additional equity income. The iShares U.S. High Dividend Equity Index ETF (XHU), which provides investors with exposure to a diversified portfolio of 75 high-quality U.S. dividend-paying stocks, was designed in response to this growing demand. Hedged to the U.S. dollar, XHU offers investors the opportunity to capture the current strength of the U.S. currency while also earning income; the fund is a good complement to the CAD-Hedged fund XHD, which has attracted nearly $170 million in assets under management (AUM) since its inception in 2012.

"Canadian investors are looking for new ways to earn income in a low yield world. We are responding with a solution that can help investors realize a continuing income equity stream, with the added optionality of benefiting from the current strength of the U.S. Dollar." said Pat Chiefalo, Head of iShares Product, BlackRock Canada.

The iShares U.S. High Dividend Equity Index ETF Addition:

Fund Name Ticker Management Fee Description
iShares U.S. High Dividend Equity Index ETF XHU 0.30% The fund seeks to provide long-term capital growth by replicating, to the extent possible, the performance of the Morningstar® Dividend Yield Focus Index net of expenses. CAD-Hedged version also available (XHD)

Further information on the iShares Funds can be found at www.iShares.ca.

About BlackRock

BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At December 31, 2014, BlackRock's AUM was $4.652 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include 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 December 31, 2014, the firm had approximately 12,200 employees in more than 30 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/ca - Twitter: @BlackRockCA - Blog: www.blackrockblog.com/can

About iShares Funds

iShares is a global leader in exchange-traded funds (ETFs), with more than a decade of expertise and commitment to individual and institutional investors of all sizes. With over 700 funds globally across multiple asset classes and strategies and more than $1 trillion in assets under management as of December 31, 2014, iShares helps clients around the world build the core of their portfolios, meet specific investment goals and implement market views. iShares funds are powered by the expert portfolio and risk management of BlackRock, trusted to manage more money than any other investment firm.

iShares® Funds are managed by BlackRock Asset Management Canada Limited.

Commissions, management fees and expenses all may be associated with investing in iShares Funds. Please read the relevant prospectus before investing. Fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. The fund is not guaranteed, its values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.

(1) The iShares Core will cover the asset classes that account for approximately 80% of all Canadian mutual fund exposures held by Canadian Investors (Source: IFIC, December, 2014).
(2) Internal research, BlackRock Canada, as of January 30, 2015.
(3) Based on a comparison of (i) the average MER of the Series F Global Equity Balanced fund category in Canada of 1.33% (Source: Investor Economics, 2013 MER data) and (ii) a model portfolio consisting of a weighting of one third in each of XAW, XIC and XQB and assuming expected MERs as follows: XAW (0.22%), XIC (0.06%) and XQB (0.03%), which include an estimated blended HST rate of 10% on the management fee of each fund.
(4) Greenwich Associates 2014 Canadian Exchange-Traded Funds Study.
(5) BlackRock Canada's Brand Study, November 2014.

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