BlackRock, Inc.

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Slightly Bullish +15

BlackRock® Canada Announces Product Changes and Risk Rating Update

AI-generated analysis

📅 Five iShares ETFs (CRQ, CIE, CJP, CWO, CLU/CLU.C) will switch indices effective August 6, 2026.

🔄 The underlying benchmarks move from FTSE RAFI to RAFI Fundamental Select series due to Research Affiliates discontinuing inputs for the current indices in September 2026.

📊 New indices utilize adjusted fundamental value metrics including buybacks and intangibles compared to the previous sales, cash flow, dividends, and book value basis.

💰 ETFs will experience higher transaction costs and realize net capital gains upon rebalancing due to the index change.

📅 Capital gains income for the 2026 tax year remains unknown until December 15, 2026, with distributions scheduled for December.

⚠️ The iShares US Fundamental Index ETF (CLU Hedged Units) risk rating was updated from 'Medium to High' to 'Medium'.

📝 The risk rating update follows a re-application of National Instrument 81-102 and is not directly caused by the index changes.

🌐 BlackRock Canada provides contact details for standardized risk classification methodology inquiries via phone, email, or mail.

Bullish Signals
  • The new indices maintain substantially the same geographic exposure and number of constituent issuers as the previous benchmarks.
  • Constituent selection continues to be based on a ranking of fundamental value, ensuring alignment with core investment philosophy.
  • The updated risk rating for the CLU Hedged Units ETF has been lowered from 'Medium to High' to 'Medium', potentially appealing to more conservative investors.
  • BlackRock Canada offers the standardized risk classification methodology documentation free of charge upon request.
Risk Factors
  • Implementing the index changes will cause the iShares ETFs to experience higher than normal transaction costs at their next scheduled rebalance.
  • The funds are expected to realize net capital gains as a direct result of the index implementation, which may impact investor returns.
  • The total net capital gains income for the 2026 tax year will not be known until December 15, 2026, creating uncertainty regarding distribution amounts.
  • Research Affiliates is ceasing to provide inputs to certain indices provided by FTSE International Limited effective September 2026, necessitating the switch.
  • The index provider for the new indices changes from a joint FTSE/RA arrangement to solely RAFI Indices, LLC.
Full Analysis
BlackRock Asset Management Canada Limited announced changes to five iShares ETFs effective August 6, 2026. The indices these funds replicate will shift from FTSE RAFI-based benchmarks to new RAFI Fundamental Select indices due to Research Affiliates ceasing inputs for the former series in September 2026. The transition involves specific fund tickers including CRQ, CIE, CJP, CWO, and CLU/CLU.C. The new indices maintain similar geographic exposure and constituent counts but alter the calculation of fundamental value to include adjusted metrics like buybacks and intangibles alongside sales, cash flow, dividends, and book value. As a result of the index rebalancing, the affected ETFs are expected to incur higher-than-normal transaction costs and realize net capital gains at their next scheduled rebalance. The total net capital gains income for the 2026 tax year will not be finalized until December 15, 2026, with distributions occurring in December. Additionally, BlackRock Canada updated the risk rating for the iShares US Fundamental Index ETF (CLU Hedged Units) from 'Medium to High' to 'Medium' following a re-application of National Instrument 81-102 investment risk classification methodology. This rating change is independent of the index switch.