BlackRock alters U.S. bond fund

BlackRock Asset Management Canada is making certain changes to the investment strategy of its iShares U.S. High Yield Bond Index Fund (XHY).

The fund will now invest primarily in a regularly rebalanced portfolio of U.S. dollar-denominated high yield corporate bonds. The performance of these will closely match the characteristics of the Markit iBoxx USD Liquid High Yield Total Return Index, with any resulting U.S. dollar currency exposure hedged back to Canadian dollars.

This will be a change from the current strategy of XHY, which involved investing in the company’s iBoxx High Yield Corporate Bond ETF. However, the investment objective of XHY and its index will remain unchanged.

BlackRock Canada expects these alterations will take place over the three-month period starting on July 22, 2013.

As a result of this new strategy, the potential expiration of U.S. tax rules exempting qualified interest income from U.S. withholding tax will no longer affect XHY. That’s because interest income arising from direct investments in U.S. fixed income securities aren’t generally subject to withholding taxes.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.