BlackRock Asset Management Canada is making certain changes to the investment strategy of the iShares US High Yield Bond Index Fund (CAD-Hedged).
The new investment strategy of XHY will be to invest primarily in a regularly rebalanced portfolio of US dollar-denominated high yield corporate bonds, selected by BlackRock Canada from time to time, that in aggregate closely match the characteristics of the Markit iBoxx USD Liquid High Yield Total Return Index hedged in CAD (the XHY Index), and hedge any resulting US dollar currency exposure back to Canadian dollars.
This will be a change from the current investment strategy of XHY, which involves investing in the iShares iBoxx $ High Yield Corporate Bond ETF, a US iShares Fund that itself invests in a portfolio of US dollar-denominated high yield corporate bonds included in the XHY Index.
The investment objective of XHY and the XHY Index will remain unchanged.
BlackRock Canada expects that the changes in XHY’s portfolio to implement this new investment strategy will take place during the three month period starting on 22 July 2013 and will be completed by 22 October 2013.
As a result of this new investment strategy, the potential expiration of US tax rules exempting qualified interest income from US withholding tax will no longer affect XHY, as interest income arising from direct investments in US fixed income securities is generally not subject to US withholding taxes.