iShares Plans Int’l Preferred Stock ETF

February 01, 2011

iShares, BlackRock’s exchange-traded funds unit, filed paperwork with the Securities and Exchange Commission to market a dividend-focused ETF that will own preferred stock in developed markets outside the U.S.

The iShares S&P International Preferred Stock Index Fund would join its U.S.-focused counterpart, the iShares S&P U.S. Preferred Stock Index Fund (NYSEArca: PFF), which has gathered more than $6 billion in assets since its March 2007 launch. iShares didn’t disclose fees or a ticker symbol for the new ETF in the filing. PFF has a 0.48 percent annual expense ratio.

The new ETF will track the S&P International Preferred Stock Index, which measures the performance of a group of non-U.S. issued or non-U.S.-listed preferred stocks, the filing said.

The portfolio has about 50 holdings, each with a market capitalization of more than $100 million and that meet various requirements, including minimum price, liquidity, trading volume and maturity.

More than 80 percent of the basket is currently allocated to financial names, and about 73 percent of it is tied to Canadian securities. Stocks from Japan, New Zealand and the United Kingdom round off the mix, according to the filing.

By comparison, PFF, which has some 220 holdings, is also heavily allocated to financial names, according to the company’s website. More than 86 percent of the portfolio is tied to that sector. Ford, Barclays Bank and HSBC Holdings top its biggest holdings lineup, which also includes Bank of America, MetLife and Wells Fargo, among others.

Preferred stocks are a class of securities that, like common stocks, represent partial ownership of a company, but are similar to fixed-income securities. They not only pay a predetermined dividend ahead of dividends paid to common stockholders, but they also take precedence in the case of a company’s liquidation.

iShares’ roster of dividend-focused funds also includes two select dividend funds tied to Dow Jones indexes.

BlackRock Fund Advisors is the subadvisor to the fund.

 

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