Frequently Asked Questions (FAQs)

Below are answers to some of the most commonly asked questions about iShares products and our website. If you have a question that isn't addressed here or have additional questions or comments, please contact us.

 

How to Buy

  • Q. How can I buy shares of iShares ETFs?

    A. Shares of iShares ETFs can be bought and sold during normal trading hours through your broker or trading platform. To trade iShares ETFs, you can use any online, discount or full-service brokerage account. Your broker/dealer will likely charge their usual commissions or fees.

  • Q. What exchanges are iShares ETFs traded on?

    A. In Canada, iShares ETFs trade on the on the Toronto Stock Exchange.

  • Q. How and when are iShares ETFs traded?

    A. They can be traded anytime during normal market trading hours, using all the trading strategies associated with stocks (market, limit and stop orders, for example). Certain iShares ETFs also have unlisted trading privileges outside of their primary exchange. All iShares ETFs are book entry, held only in the Depository Trust Company (DTC).

  • Q. How can I tell if there are options available on certain iShares ETFs?

    A. There are a few ways that you can tell which iShares ETFs have options available for trading.

    If options are available on a specific fund, there will be the word “Yes” next to the words "Options Available" at the bottom of the "Key Facts" section on the "Product Overview" page.

    On our product list, any fund which has an asterisk (*) next to the Ticker Symbol has options available on it.

  • Q. Why do some iShares ETFs not have options trading available on them?

    A. Decisions on the availability of options rest with the Montreal Options Exchange, not with the iShares or BlackRock businesses.

  • Q. How is the trading price of an ETF determined?

    A. The trading price of an ETF is expected to be approximately equal to the trading value of the underlying securities held in the fund plus any undistributed net income, less fees and expenses. The ETF's market value will trade during the day based on supply and demand, but generally is expected to trade at or close to the fund's NAV.

  • Q. What is the minimum I can invest in ETFs?

    A. There is no minimum investment. As with a typical stock transaction, your broker will likely require you to purchase in a board lot, which is 100 shares.

  • Q. When is performance data available on BlackRock.com/CA?

    A. Performance data is released on the 2nd business day of the month/quarter.

  • Q. What is the difference between total return and market price return?

    A. Total return represents changes to the NAV and accounts for distributions from the fund. Market price return also includes the fund distributions, but instead of NAV, the midpoint price is used. The midpoint is the average of the bid-ask prices at 4:00 PM ET (when NAV is normally determined for most iShares ETFs).

    (Index total returns are calculated by determining the percent difference in index level from one period to the other. Total return index levels are used for this purpose.)

  • Q. Why does an external data provider have different performance numbers than what's listed on BlackRock.com/CA?

    A. External data provider data may differ because external sources may be using a different return time period or return type (price return vs. total return).

    BlackRock.com/CA uses the NAV to calculate the total return values and the midpoint market prices to calculate market price return. Both the total return and market price return are adjusted for distributions.

    Performance numbers on Bloomberg, on the other hand, are calculated using the midpoint price of bid/ask, not NAV, and are based on the previous day's data. For example, Bloomberg's midpoint on the 2nd of the month is actually the midpoint from the 1st. If one is using a Bloomberg terminal on the 2nd, they will see a midpoint before market close because it is the midpoint of the previous day.

  • Q. Where is the closing price on the fund overview page derived from?

    A. The closing price listed on the overview page is the primary closing price on the main exchange that the product trades on. If other external sources derive their closing from other sources, there may be small price discrepancies.

 

Distributions & Tax

  • Q. Do iShares ETFs pay distributions?

    A. As with most mutual funds, iShares ETFs distribute income and capital gains to unitholders. These distributions are taxable to investors, whether they are paid in cash or reinvested in the fund. Please check the individual fund product page on BlackRock.com/CA for specific distribution dates and tax information.

    Your broker is responsible for determining whether to withhold tax on any distribution paid to you. Your broker is also responsible for providing all required tax reporting, including T3 forms. In Canada, BlackRock Canada provides brokerage firms with the information that they need to prepare your T3 (such as the proportionate share of distributions attributable to dividends, income, capital gains, return of capital or foreign tax withheld) through the facilities of Computershare Investor Services Inc. (the funds' transfer agent ) and CDS Clearing and Depository Services Inc. (CDS). This is different from a typical mutual fund, where the mutual fund company maintains investor accounts and provides tax reporting directly to unitholders.

  • Q. What is the difference between cash distributions and reinvested distributions?

    A. iShares ETFs may pay distributions to unitholders in cash or may reinvest the distribution amount in the fund. Generally, net income and dividends received by the iShares ETFs are distributed to unitholders in cash and net realized capital gains are reinvested in the ETF.

    Similar to mutual funds, reinvested distributions are reinvested on the unitholder's behalf in additional units of the fund. With mutual funds, this results in an increase in the number of units held by each unitholder and a corresponding drop in net asset value (NAV) per unit, such that there is no change in the total value of the holdings resulting from the distribution. With iShares ETFs, immediately following a reinvested distribution, the number of units outstanding is consolidated so that the number of units held by investors is the same as before the capital gains distribution. For iShares funds, unitholders will not see an increase in the number of units held, and will NOT see a change in the NAV per unit. Therefore, like mutual funds, a reinvested distribution for an iShares ETF results in no change in the total value of the holdings resulting from the distribution.

    For reinvested distributions for an iShares ETF, an investor can increase the adjusted cost base (ACB) of the iShares ETF by the amount of the reinvested distribution. This adjustment means that any gain realized on a subsequent sale of units will, in effect, be reduced by the amount of the distribution. In this way, you do not pay tax twice on the distribution. In many cases, your brokerage firm will automatically change the ACB to reflect reinvested distributions on iShares ETFs. However, not all brokerage firms provide this service.

    iShares ETF Mutual Fund
    Jan 1, 2010 - buy 1000 units at $50 Dec 31, 2010 - fund pays reinvested distribution of $1 per unit; price=$55 Jan 1, 2010 - buy 1000 units at $50 Dec 31, 2010 - fund pays reinvested distribution of $1 per unit; price=$54 ($55 - $1)
    Units 1,000 1,000 1,000 1018.5185
    Book Value 50,000 51,000 50,000 51,000
    Market Value 50,000 55,000 (1000x$55) 50,000 55,000 (1018.5185 x $54)
    Unrealized Gain (not taxed) $0 4,000 ($55,000 - $51,000) $0 4,000 ($55,000 - $51,000)
    Additional units from distribution n/a 0 n/a 18.5185 (1000 x $1/$54)
    Taxable amount of distribution n/a $1,000 n/a $1,000

    Note: From the above illustration, you can see the net effect is the same for both the iShares ETF and mutual fund for the book value, market value, unrealized gain and taxable amount of distribution although the end result is reached through a different process.

     

  • Q. Are iShares ETFs RSP eligible?

    A. All iShares ETFs that are offered under a prospectus in Canada are RSP eligible. In addition, many of the iShares ETFs that trade on foreign exchanges are also RSP eligible. In general, iShares ETFs that are considered marketable securities and that trade on an established market index are RSP eligible; however, not all iShares ETFs would be RSP eligible and you should consult with your own broker or tax advisor regarding your personal circumstances.

  • Q. What are the tax implications for non-resident investors in iShares ETFs?

    A. The iShares ETFs were established for the benefit of Canadian resident investors. Therefore, BlackRock Canada does not determine the tax implications for non-resident investors in iShares funds. Non-resident investors should consult their broker or tax advisor to determine the implications of investing in iShares funds for their specific tax situation.

 

Fixed Income

  • Q. What is weighted average coupon?

    A. The mean of the coupon rates of the underlying bonds in a portfolio.

  • Q. What is weighted average maturity?

    A. The mean of the remaining term to maturity of the underlying bonds in a portfolio.

  • Q. What is the average yield to maturity?

    A. Yield to Maturity (YTM) is the discount rate that equates the present value of a bond's cash flows with its market price (including accrued interest). The Fund Average YTM is the weighted average of the fund's individual bonds holdings' YTMs based upon Net Asset Value ("NAV"). The measure does not include fees and expenses.

  • Q. What is duration?

    A. Duration measures the approximate sensitivity of a bond's price to a change in interest rates. A duration of 2, for example, means that the price of the bond would decrease/increase by approximately 2% if the interest rate increased/decreased by 1%.

 

Other

  • Q. What is the difference between iShares ETFs traded on the Toronto Stock Exchange and iShares Funds traded on other stock exchanges?

    A. Various companies which form part of BlackRock, Inc. manage iShares funds that are traded on different exchanges in many countries around the world including Canada, the United States, Mexico, the United Kingdom, France, Italy, Germany, Spain and Hong Kong. The iShares funds which trade on the Toronto Stock Exchange directly (not through a cross listing from another exchange) are managed by BlackRock Asset Management Canada Limited or BlackRock Investments Canada Inc. (together, "BlackRock Canada") and are issued pursuant to a prospectus filed with Canadian regulators. iShares ETFs that trade on foreign exchanges are not issued under a prospectus filed in Canada but are registered and regulated according to the securities regulations in their own jurisdiction. BlackRock Asset Management Canada Limited does not promote the iShares funds traded on exchanges other than the Toronto Stock Exchange.

  • Q. How are iShares Funds different from mutual funds?

    A. iShares ETFs offer many of the advantages of mutual funds, such as the ability to obtain exposure to broadly diversified asset classes through a single trade, combined with additional advantages that come from a fund that trades like a stock on an exchange. These additional advantages include the ability to trade iShares ETFs on an exchange throughout the day, utilizing trading strategies such as limit or stop orders or trading on margin, low costs and transparency.

    The following chart illustrates the difference between iShares ETFs and traditional mutual funds:

    iShares ETFs Traditional Mutual Funds
    Pricing Throughout the trading day Once per day using closing prices for fund net asset value
    Short selling Yes -investors can hold long or short positions No - long positions only
    Limit Order Yes - investors can request their own price to execute any trade, however, there are no execution guarantees No - the only price available is the net asset value (NAV) per unit
    Cost Low Varies (low to high)
    Portfolio turnover Very low (leading to lower taxable distributions) Varies according to manager style (high turnover leads to high taxable distributions)
    Marginable (ability to leverage) Yes - standard security margin rules apply Varies by broker/dealer or trust company rules
    Disclosure of portfolio holdings High-holdings disclosed daily for most iShares funds Low-holdings typically disclosed semi-annually
  • Q. What is the difference between Common Class and Advisor Class Units?

    A. Each ETF offers two classes of units called the Common Unit and Advisor Class Unit. The only difference between the two classes of units is the service fee component for the management fees payable on the Advisor Class Unit. The Common Unit has been designed to be purchased by institutional and individual investors. The Advisor Class Unit (denoted by ".A" on the ticker) has been designed only for clients who are advised by a registered investment advisor and purchased through an advisor.

  • Q. Do iShares ETFs charge redemption fees?

    A. There are no redemption fees when iShares ETFs are sold on the exchange. Only customary brokerage fees and other transactional fees apply. When iShares ETFs are redeemed directly from a fund certain discounts or fees apply. See the individual iShares ETFs fund prospectuses for details. Because investors will generally be able to sell iShares ETFs at the market price on the exchange through a registered broker or dealer, subject only to customary brokerage commissions, investors are advised to consult their brokers, dealers or investment advisors before redeeming iShares ETFs.