Advisor feedback plays into provider’s ETF strategy

Advisor feedback plays into provider’s ETF strategy

Advisor feedback plays into provider’s ETF strategy Earlier this week BlackRock Canada introduced a couple of new ETFs developed specifically as a result of feedback from advisors on its January launch of the iShares Short Term Strategic Fixed Income ETF.

While the XSI has been one of the most successful product launches in 2015 – it’s been the best new ETF in terms of inflows, in the top 10 overall, and has amassed $220 million in AUM in just seven months – there were some things advisors felt were missing from XSI; as a result BlackRock went back into the lab to create two more ETFs to address those needs.

“We did get feedback that there were a couple of things they [advisors] wouldn’t mind seeing tweaks on,” said Pat Chiefalo, iShares Canada’s head of product. “So, as opposed to making tweaks to the original product, we said ‘you know what, it’s resonating really well, let’s launch a suite’ so now we’ve launched two additional products with the same type of model but we’ve changed a few things.”

The two products: iShares Conservative Short Term Strategic Fixed Income ETF and iShares Conservative Strategic Fixed Income ETF trade under the symbols XSC and XSE respectively.

The tweaks Chiefalo mentioned have to do with duration, yield-to-maturity and high-yield caps.

“Both of the two new products have a more conservative approach with regards to high yield,” said Chiefalo. “The XSC continues to maintain its shorter duration [3.5 years] so we have that cap on duration which helps advisors that are concerned with interest rate volatility and we’re able to get a reasonably robust yield of close to 3.2% in terms of an average yield-to-maturity. It’s a good level of income and it also gives some exposure to global fixed-income which is traditionally hard for Canadians to get access to.”

The second new product, the XSE, pushes out the duration from 3.5 years to unconstrained although it currently sits at 6.5% with a yield-to-maturity of 4.3% and a 25% cap on high yield exposure.

Why should advisors care about these two new products?

“We wanted to offer solutions-driven product but based on feedback they [advisors] still wanted a little bit of input in terms of how much high yield and what type of duration risk I’m getting on it,” Chiefalo said. “And that’s why I feel this suite [XSI, XSC and XSE] works really well.”

Advisors: It's your last chance to have your say on fund providers

The results for the second annual WP Advisors on Fund Providers Survey have been pouring in providing some very interesting findings. Fees continue to be a major issue for both fund providers and advisors.

With just a few days left for advisors to fill out this year’s survey it’s your chance to let us know how you feel they’re doing when it comes to meeting the needs of your business.

Make your vote count.

To take the survey click here.