BlackRock ® Canada Announces Changes to the iShares Jantzi Social Index ETF

BlackRock Canada's iShares Jantzi Social Index ETF is expected to experience higher portfolio turnover and realize net capital gains due to changes in the Morningstar Jantzi Social Index's evaluation process, effective June 20, 2025. These changes, including a shift to semi-annual rebalancing and revised ESG criteria, will likely result in increased transaction costs for the iShares ETF. The ETF's total net capital gains income for the year will be determined by December 15, 2025, with distributions following the normal process.

Analysis

BlackRock Canada has announced that its iShares Jantzi Social Index ETF is poised for higher than normal portfolio turnover due to significant upcoming changes in its underlying benchmark, the Morningstar Jantzi Social Index, effective June 20, 2025. These changes include a renaming of the index, a shift to semi-annual rebalancing in June and December from its current annual March schedule, the adoption of the Morningstar Canada Large-Mid Index as its new parent benchmark, and revisions to its ESG exclusion and constituent selection criteria. Consequently, the iShares ETF is expected to incur increased transaction costs and realize net capital gains. The precise amount of these net capital gains will only be determined at the ETF's tax year-end on December 15, 2025, with distributions to follow the standard December schedule. This rebalancing reflects a strategic shift by Morningstar in how the social index is constructed and maintained, which will directly influence the ETF's composition and operational characteristics.

Key Decisions for Investors

• Investors holding the iShares Jantzi Social Index ETF should anticipate increased portfolio turnover around the June 20, 2025 rebalance, potentially leading to higher transaction costs and the realization of net capital gains, with tax implications to be clarified by December 2025.
• Prospective investors should carefully evaluate how the new index methodology, including more frequent rebalancing and altered ESG criteria, might affect the ETF's future risk-return profile, tracking efficiency, and alignment with their specific socially responsible investment objectives before committing capital.
• All investors should monitor the ETF's post-rebalance disclosures to understand the new portfolio composition resulting from the Morningstar Jantzi Social Index changes and to assess its continued suitability for their investment strategy.