iShares has added the iShares Core Short Term High Quality Canadian Bond Index ETF (XSQ) to its Core Series.
The new fund will deepen the fixed income opportunities within the Core Series by offering investors low-cost exposure to high quality, liquid, short duration Canadian bonds (1-5 years), with a credit rating of A or higher.
XSQ has an annual management fee of 0.12 per cent. XSQ has now closed the initial offering of its units which are available for trading on the TSX.
“In an environment where rising rates are on the horizon, investors are reconsidering how best to access bonds,” says Noel Archard, managing director, head of BlackRock Canada. “With the addition of XSQ to our iShares Core Series, Canadian investors will have low-cost access to high quality short duration bonds that are well-suited for the long term as well as for managing against this potential risk.”
Similar to the iShares Core High Quality Canadian Bond Index ETF (XQB), which is also part of the iShares Core Series, XSQ will provide diversified bond exposure with a weighting of 60 per cent government bonds and 40 per cent corporate bonds. While XQB covers the universe, XSQ will capture the short end of the Canadian bond universe by seeking to replicate, to the extent possible, the performance of the FTSE TMX Canada Liquid Short Term Capped Bond Index.
Both XSQ and XQB provide investors with exposure to higher credit quality bonds without a large sacrifice in yield relative to comparable market cap weighted portfolios that include lower rated securities across their respective duration profiles.
