Canadian Preferred for U.S. Consumption (CNPF)

May 27, 2011 by  
Filed under Commentary, ETF IPOs (New ETFs)

Global X continues to find interesting and untapped niches of investment securities to package into ETFs.  On Wednesday (5/25/11), their list of offerings expanded with the introduction of the Global X Canada Preferred ETF (CNPF).  This is the first ETF targeting preferred stock issued by Canadian companies.  Its NYSE listing provides U.S. investors with easy access to this north-of-the-border asset class.

The Global X Canada Preferred ETF tracks the Solactive Canada Preferred Stock Index, which is designed to measure the performance of preferred stocks from Canadian issuers traded on the Toronto Stock Exchange.  Because preferred stocks are somewhat of a hybrid between bonds and common stock, leaning to the bond characteristics, the index performance doesn’t necessarily reflect the performance of the issuing companies.  Each component is weighted by its market capitalization.  The weights of all components from each issuer are combined to determine the Issuer Weight, and it is then capped at 4.75%.

There are currently 58 holdings in all, and the ten largest are Transcanada 4.6 Pfd 3.3%, Manulife Financial 6.6 Pfd 2.9%, Canadian Imperial Bank 4.7 Pfd 2.9%, Royal Bank Canada 6.25 Pfd 2.9%, Bank Of Montreal 5.4 Pfd 2.8%, Royal Bank Canada 5.0 Pfd 2.8%, Can Imperial Bank 4.8 Pfd 2.8%, Husky Energy 4.45 Pfd 2.6%, Transalta 4.6 Pfd 2.5%, and Royal Bank Canada 6.25 Pfd 2.5%.

Sector representation is heavily skewed toward Financials at 73.3%, followed by Energy 10.3%, Telecommunications 6.5%, Consumer Discretionary 5.7%, Consumer Staples 2.5%, and Utilities 1.8%.

Global X typically does an admiral job of providing fund details and background information on its new offerings.  It fell short of the mark this time, with many important data points missing.  For starters, as an “income” fund, investors would like to know how much income CNPF will generate.  No information regarding yield or potential tax treatment for U.S. shareholders is located in the summary or fact sheet (pdf).  There are not even place holders for this information to be added at a later time.

We do know that it carries an expense ratio of 0.58%, that there was a press release, and it has a prospectus (pdf).

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Comments

One Response to “Canadian Preferred for U.S. Consumption (CNPF)”

  1. Ron Rowland on July 1st, 2011 1:20 pm

    Global X announced July 1, 2011 that SDIV and CNPF would begin making monthly distributions.

    Link to press release: http://www.globalxfunds.com/NewsFile/income_dividends_finalweb.pdf

Free Special Report

With interest rates near zero, how can you generate income with your nest egg? Our free special report shows you how. cover art
You will also receive our weekly market commentary and unique analysis based on our Edge Charts. Privacy

The Market Today

Subscribe to Commentary

Sign up HERE to get breaking news from Invest With An Edge & other updates.