BlackRock to transition preferred stock ETF to ICE index

Dec 5th, 2018 | By | Category: Alternatives / Multi-Asset

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BlackRock has announced that the iShares US Preferred Stock ETF (PFF US) will change index provider in favour of ICE Data Services, the indexing division of Intercontinental Exchange.

Lynn Martin, President and Chief Operating Officer of ICE Data Services

Lynn Martin, President and Chief Operating Officer of ICE Data Services.

With $13.7 billion in assets under management, PFF is the largest preferred stock ETF available on the market.

The ETF currently tracks the S&P US Preferred Stock Index which is composed of US-traded preferred stocks meeting size, liquidity, listing venue, and time to maturity criteria. The index is weighted by total market capitalization, subject to a single issuer weight cap of 10%.

Effective 31 January 2019, the fund will begin tracking the ICE Exchange-Listed Preferred & Hybrid Securities Transition Index for a period of approximately nine months. Following the transition period, the fund will track the ICE Exchange-Listed Preferred & Hybrid Securities Index.

The transition to the final index is expected to broaden the investment universe of the fund. This index consists not only of US dollar-denominated preferred stocks but also includes hybrid securities and convertible preferred securities with face amounts outstanding of at least $250 million and $50m respectively.

Following the completion of the transition phase, the fund will be renamed the iShares Preferred and Income Securities ETF. Its ticker will remain unchanged, and the ETF will continue to be listed on Nasdaq Exchange.

PFF comes with an expense ratio of 0.46%.

“ICE has invested significant resources to build high-quality data and analytics capabilities, particularly around index design and calculation services,” said Heather Brownlie, Head of US iShares Fixed Income at BlackRock. “We’re pleased to partner with them to position our preferred stock ETF for the future.”

“The iShares US Preferred Stock ETF is a premier fund serving the investment community, and we’re thrilled to have been chosen as the index provider,” added Lynn Martin, President and Chief Operating Officer of ICE Data Services. “The selection of our indices showcases our ability to manage exposure across asset classes. This capability uniquely positions us to offer a wide range of customized solutions which support all aspects of the benchmarking and performance measurement process to an increasing customer base.”

This is not the first time this year that BlackRock has changed index provider in favour of ICE Data Services. In August BlackRock transitioned four iShares corporate bond ETFs, housing a combined $19 billion in assets under management, to ICE indices.

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