Tax Management
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Investors can employ tax-loss harvesting strategies at year-end to reduce their overall tax liabilities. By purchasing an ETF that is highly correlated to the sold security, an investor can help reduce cash drag on the portfolio and/or an inadvertent underweight to a particular sector by getting invested again immediately and maintaining desired exposures.

Swap out single stock positions for iShares ETFs to maintain market and sector exposure while creating a scalable alternative to managing single stock portfolios.

As an example, you can swap your holding in Royal Bank of Canada (RY), which is down 5.38% on a YTD basis, to the iShares S&P®/TSX® Capped Financials Index Fund (XFN). RY has a 5-year correlation of 0.82 to XFN.

Similarly, you can swap your holding in Canadian Natural Resources Ltd (CNQ), which is down 30.13% on a YTD basis, to the iShares S&P/TSX Capped Energy Index Fund (XEG). CNQ has a 5-year correlation of 0.92 to XEG.

It also may be time to substitute mutual funds held at a loss for more tax efficient iShares ETFs to help protect client portfolios against the potential performance drag of year-end capital gains.

Source: Morningstar Inc., Bloomberg L.P. & BlackRock Asset Management Canada Limited ("BlackRock Canada"). Data as of 30 September 2011.