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Top Tax-Loss Harvesting Trade Ideas
Implementing a Tax Strategy as Year-End Approaches.

Alfred Lee, CFA, CMT, DMS
Vice President, BMO ETFs
Portfolio Manager & Investment Strategist
BMO Asset Management Inc.
www.bmo.com/etfs

November 14, 2013

What is Tax-Loss Harvesting?
  • Tax-loss harvesting is a year-end strategy for investors to try to reduce their tax liabilities. By disposing of securities with accrued capital losses, investors can help offset taxes incurred by other parts of a portfolio that were sold at a capital gain in the year or in the prior three years. These proceeds from the sale of securities can then be reinvested in a different security with a high correlation to the disposed security to maintain market exposure.
  • If capital gains are not available in the current year, the realized losses may be carried back for three years or carried forward to reduce capital gains in upcoming years.
  • The ability to recognize a capital loss may be restricted in certain circumstances, including where the acquired security is the same as or identical to the disposed security. Investors should consult their own tax advisor to ensure that restrictions do not apply.

Tax-loss harvesting example:

  • Realized capital gains from previous transactions or distributions can be offset by selling securities which are trading at a lower price than their tax-adjusted cost base.
  • Investors can then use the proceeds from the disposed security and invest in a different security such as a BMO ETF.
  • Tax-loss harvesting can also be applied to other financial instruments such as bonds, mutual funds, etc.


Equity ETFs for Tax-Loss Harvesting Strategies*
Stock to Sell (Ticker) YTD Return (%) Correlated BMO ETF (Ticker)
Kinross Gold Corp (K) -46.9% BMO S&P/TSX Equal Weight Global Gold Index ETF (ZGD)
Barrick Gold Corp (ABX) -45.7% BMO S&P/TSX Equal Weight Global Gold Index ETF (ZGD)
Yamana (YRI) -43.4% BMO S&P/TSX Equal Weight Global Gold Index ETF (ZGD)
BlackBerry Ltd (BB) -42.5% BMO Nasdaq 100 Equity Hedged to CAD Index ETF (ZQQ)
Goldcorp Inc (G) (BB) -31.2% BMO S&P/TSX Equal Weight Global Gold Index ETF (ZGD)
Sherritt International Corp (S) -41.4% BMO S&P/TSX Equal Weight Global Base Metals Hedged to CAD Index ETF (ZMT)
Athabasca Oil Corp (ATH) -36.7% BMO S&P/TSX Equal Weight Oil & Gas Index ETF (ZEO)
B2Gold Corp (BTO) -35.1% BMO Junior Gold Index ETF (ZJG)
Teck Resources Ltd (TCK/B) -24.7% BMO S&P/TSX Equal Weight Global Base Metals Hedged to CAD Index ETF (ZMT)
Dundee Real Estate Investment Trust (D-U) -24.6% BMO Equal Weight REITs Index ETF (ZRE)
Alamos Gold Inc (AGI) -21.2% BMO Junior Gold Index ETF (ZJG)
Cominar Real Estate Investment Trust (CUF-U) -20.3% BMO Equal Weight REITs Index ETF (ZRE)
HudBay Minerals Inc (HBM) -18.5% BMO S&P/TSX Equal Weight Global Base Metals Hedged to CAD Index ETF (ZMT)
Penn West Petroleum (PWT) -18.2% BMO S&P/TSX Equal Weight Oil & Gas Index ETF (ZEO)
Emera Inc (EMA) -14.4% BMO Equal Weight Utilities Index ETF (ZUT)
RioCan Real Estate Investment Trust (REI-U) -11.0% BMO Equal Weight REITs Index ETF (ZRE)
Fortis Inc Canada (FTS) -6.9% BMO Equal Weight Utilities Index ETF (ZUT)
Finning International (FTT) -5.9% BMO S&P/TSX Equal Weight Industrials Index ETF (ZIN)
Encana Corp (ECA) -5.1% BMO S&P/TSX Equal Weight Oil & Gas Index ETF (ZEO)

*Please note the above considerations are based on realizing the loss on the stocks in a tax-loss harvesting strategy, rather than recommendation on the future performance of the security. Year-to-date total return as of November 11, 2013.


Fixed Income and Preferred Share ETFs for Tax-Loss Harvesting Strategies*
Fixed Income Area BMO ETF
Canadian Preferred Shares BMO S&P/TSX Laddered Preferred Share Index ETF (ZPR)
Broad Canadian Bonds BMO Aggregate Bond Index ETF (ZAG)
Short-Term Federal Bonds BMO Short Federal Bond Index ETF (ZFS)
Mid-Term Federal Bonds BMO Mid Federal Bond Index ETF (ZFM)
Long-Term Corporate Bonds BMO Long Federal Bond Index ETF (ZFL)
Short-Term Provincial Bonds BMO Short Provincial Bond Index ETF (ZPS)
Mid-Term Provincial Bonds BMO Mid Provincial Bond Index ETF (ZMP)
Long-Term Provincial Bonds BMO Long Provincial Bond Index ETF (ZPL)
Short-Term Corporate Bonds BMO Short Corporate Bond Index ETF (ZCS)
Mid-Term Corporate Bonds BMO Mid Corporate Bond Index ETF (ZCM)
Long-Term Corporate Bonds BMO Long Corporate Bond Index ETF (ZLC)

*Please note the above considerations are based on realizing the loss on the stocks in a tax-loss harvesting strategy, rather than recommendation on the future performance of the security. Year-to-date total return as of November 11, 2013.


ETF Substitutes for a Tax-Loss Harvesting Strategies*
ETF to Sell (Ticker) YTD Return (%) Correlated BMO ETF (Ticker)
S&P/TSX Global Gold Index Fund (XGD) -42.3% BMO S&P/TSX Equal Weight Global Gold Index ETF (ZGD)
iShares S&P/TSX Capped REIT Index Fund (XRE) -12.1% BMO Equal Weight REITs Index ETF (ZRE)
iShares JP Morgan USD Emerging Market Bond Index Fund - CAD Hedged (XEB) -11.6% BMO Emerging Market Bond Hedged to CAD Index ETF (ZEF)
S&P/TSX Capped Utilities Index Fund (XUT) -8.5% BMO Equal Weight Utilities Index ETF (ZUT)
iShares S&P/TSX Global Based Metals Index Fund (XBM) -7.1% BMO S&P/TSX Equal Weight Global Base Metals Hedged to CAD Index ETF (ZMT)
Vanguard FTSE Canadian Capped REIT Index ETF (VRE) -6.5% BMO Equal Weight REITs Index ETF (ZRE)
iShares S&P/TSX Canadian Preferred Share Index Fund (CPD) -5.9% BMO S&P/TSX Laddered Preferred Share Index ETF (ZPR)
iShares Diversified Monthly Income Fund (XTR) -5.9% BMO Monthly Income ETF (ZMI)
iShares US IG Corporate Bond Index Fund - C$ Hedged (XIG) -5.7% BMO Mid-Term US IG Corporate Bond Hedged to CAD Index ETF (ZMU)

*Please note the above considerations are based on realizing the loss on the stocks in a tax-loss harvesting strategy, rather than recommendation on the future performance of the security. Year-to-date total return as of November 11, 2013.

BMO Asset Management Inc. offers 55 different exchange traded funds (ETFs) with products that provide a range of exposure including broad markets, asset classes, targeted exposure or strategy specific ETFs, allowing investors to more efficiently execute their tax-loss harvesting strategy. Investors should consult their own tax advisor before executing a tax-loss harvesting strategy.

For questions, please contact:

Client Services: 1-800-361-1392

For a Full List of Tax-Loss Harvesting Ideas please contact:

Kevin Prins
Vice President, Ontario
kevin.prins@bmo.com

Daniel Stanley
Vice President, Ontario
daniel.stanley@bmo.com

Alain Desbiens
Vice President, Quebec & Atlantic
alain.desbiens@bmo.com

Mark Webster
Vice President, Western Canada
mark.webster@bmo.com

*All prices as of market close November 11, 2013 unless otherwise indicated.

Disclaimer:

BMO ETFs are managed and administered by BMO Asset Management Inc. an investment fund manager and portfolio manager and separate legal entity from the Bank of Montreal. Commissions, management fees and expenses all may be associated with investments in exchange traded funds. Please read the prospectus before investing. The funds are not guaranteed, their value changes frequently and past performance may not be repeated.

This summary is of general nature only and is not exhaustive of all possible income tax considerations. You should therefore consult your own tax advisors about you individual circumstances.

Information, opinions and statistical data contained in this report were obtained or derived from sources deemed to be reliable, but BMO Asset Management Inc. does not represent that any such information, opinion or statistical data is accurate or complete and they should not be relied upon as such. Particular investments and/or trading strategies should be evaluated relative to each individual's circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment.

Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Standard & Poor's® and S&P® are registered trademarks of Standard & Poor's Financial Services LLC ("S&P") and "TSX" is a trademark of Toronto Stock Exchange. These trademarks have been licensed for use by BMO Asset Management Inc. BMO ETFs are not sponsored, endorsed, sold or promoted by S&P or Toronto Stock Exchange, and S&P and Toronto Stock Exchange make no representation, warranty or condition regarding the advisability of buying, selling or holding units in the BMO ETFs.

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