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Blue chips in the red? Harvest end-of-year losses with ETFs

Issue 21, 2011

Investment losses are not always a bad thing. When securities are sold at a loss, those losses can be used to offset capital gains and reduce tax liabilities.

Ideas to take advantage of blue chip losses:
Swap out single stock positions for exchange-traded funds (ETFs) to maintain exposure to high quality, dividend-oriented U.S. equities and create a scalable alternative to managing single stock portfolios.

Consider exchanging mutual funds for tax efficient ETFs to help protect your client portfolios against the potential performance drag of year-end capital gains.

Book losses now with:
  • Dow Jones Select Dividend Index Fund (DVY) — Top 100 broad-cap U.S. stocks ranked by annual dividends with five-year history of dividend growth*
  • High Dividend Equity Fund (HDV) — Top 75 dividend paying U.S. stocks; stringent high quality screens lead to larger-cap focus*

By building low-cost, tax-efficient portfolios, you can help clients navigate difficult and uncertain times.

To learn more go to the ETF Center on NetX360®.

*Subject to eligibility screens and weighting methodology

Carefully consider the iShares Funds’ investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the funds’ prospectuses, which may be obtained by calling 1-800-iShares (1-800-474-2737) or by visiting Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal.
In addition to the normal risks associated with investing, narrowly focused investments typically exhibit higher volatility. There is no guarantee that dividends will be paid.

Mutual funds and iShares Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of the iShares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well.

Investment comparisons are for illustrative purposes only and are not meant to be all-inclusive. To better understand the similarities and differences between investments, including investment objectives, risks, fees and expenses, it is important to read the products’ prospectuses.

The iShares Funds (“Funds”) are distributed by SEI Investments Distribution Co. (“SEI”). BlackRock Fund Advisors (“BFA”) serves as the investment advisor to the Funds. BFA is a subsidiary of BlackRock Institutional Trust Company, N.A., neither of which is affiliated with SEI.

The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Dow Jones Trademark Holdings, LLC, nor does this company make any representation regarding the advisability of investing in the Funds. Neither SEI, nor BlackRock Institutional Trust Company, N.A., nor any of their affiliates, are affiliated with the company listed above.

Neither BlackRock Institutional Trust Company, N.A., and its affiliates nor SEI and its affiliates provide tax advice. Please note that (i) any discussion ofU.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.

iShares® is a registered trademark of BlackRock Institutional Trust Company, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. iS-5633-1111

For Professional Use Only.

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