VanEck Vectors ETF's N.V. Information regarding upcoming merger of sub-funds
14 Septiembre 2021 - 8:20AM
UK Regulatory
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Information regarding upcoming merger of sub-funds VanEck Vectors ETFs N.V.
1. About the merger
VanEck Asset Management B.V. ("VanEck") is the management company of the
umbrella fund VanEck Vectors ETFs N.V. VanEck intends to merge ('merger by
conversion') a sub-fund of this umbrella fund; VanEck Vectors Global Equal
Weight UCITS ETF ("Merging UCITS") into another sub-fund of the same umbrella
fund; VanEck Vectors Sustainable World Equal Weight UCITS ETF ("Receiving
UCITS") [1], each a "Sub-fund" where the context requires.
2. Rationale of the merger
There are a number of reasons why the management company intends to merge the
abovementioned Sub-funds:
- The Merging UCITS experienced substantial outflows over the last years
(the AuM decreased from EUR 520 million (December 2016) to EUR 309 million (24
August 2021) leading to higher costs for the investors given its degressive fee
model. Combined with the AuM of the Receiving UCITS the total AuM will be
approximately EUR 408 million (if the AuM's after the merger would remain the
same).
- The Sub-funds have overlapping investment policies. Both Sub-funds are
globally diversified equity ETF's consisting of 250 stocks that invest in and
physically hold the underlying securities that make up a global index. Both
Sub-funds have an equally weighted index with a cap on the North America,
Europe and Asia regions of 40%. The universe of both Sub-funds overlap
materially. The main difference between the two Sub-funds is that the Receiving
UCITS tracks a global benchmark that has several restrictions of the universe
based upon sustainability characteristics whereas the Merging UCITS tracks a
benchmark without these limitations.
- Increasing demand for Sustainable investment solutions. VanEck
experiences an increasing demand for sustainable investment solutions. These
sustainable characteristics are becoming more and more the norm for investors
leaving less room for mainstream products. VanEck expects that the demand for
the Receiving UCITS will substantially increase going forward whereas the
demand for the Merging UCITS will further deteriorate going forward.
- VanEck's ambition to improve its sustainable footprint by increasingly
focusing product strategies on sustainable investment strategies.
In the light of the aforementioned reasons, VanEck believes that it is in the
interest of the participants of both Sub-funds to merge the Merging UCITS into
the Receiving UCITS.
3. The differences between the Receiving and Merging UCITS
Investment policy
Both the Merging UCITS and the Receiving UCITS are globally diversified equity
ETF's consisting of 250 stocks that invest in and physically hold the
underlying securities that make up a global index. Both Sub-funds track an
index, but the respective index differs. The Receiving UCITS is tracking the
Solactive Sustainable World Equity Index GTR and the Merging UCITS is tracking
the Solactive Global Equity Index GTR. The main difference between these
indices are exclusions based upon sustainable considerations that are applied
to the benchmark of the Receiving UCITS. The exclusions are based on ESG
screening performed by Vigeo Eiris based on the UN Global Compact principles
and specific exclusions. These exclusions are not applied to the benchmark of
the Merging UCITS. The portfolio will be aligned after the merger. VanEck will
incur the cost of rebalancing and the transaction costs to ensure that
constituents of the index of the Receiving UCITS are received.
Risks
The risk indicator (SRRI) according to the KIID of each of the Merging and
Receiving UCITS is '6'. Given the overlap in investment policy and investment
universe the risk profile of both funds is fairly similar.
Costs
The ongoing charges figure of the Merging UCITS is capped at 0.2% and the exact
height of the fee depends on the total AUM. With AUM of more than ? 200
million, 0.17% is charged on the excess, and if ? 400 million is exceeded,
0.15% on the excess. 0.13% is charged on the excess above ? 1000 million. The
ongoing charges figure of the Receiving UCITS is 0.3%. VanEck will reduce the
fixed fee of the Receiving UCITS to 0.2% directly after the merger. No
performance fees are applied to any of the Sub-funds.
Other aspects
The legal status of the Sub-fund, periodic reports, fiscal treatment, the
auditor, the depositary (State Street Bank International GmbH), supervisory
authority (Dutch Authority for the Financial Markets) and the management
company (VanEck Asset Management B.V.) will not change as a result of the
merger. After all, it concerns a merger of Sub-funds within an umbrella fund.
Tax consequences
The merger will not subject the Merging UCITS or the Receiving UCITS to
taxation in the Netherlands. Participants may however be subject to taxation in
their tax domiciles or other jurisdictions where they pay taxes.
Notwithstanding the above, as tax laws differ widely from country to country,
participants are advised to consult their tax advisers as to the tax
implications of the merger specific to their individual cases.
Benefits
VanEck is of the opinion that the size of the Merging UCITS has experienced too
much outflows to successfully pursue the investment policy in the interest of
the participants. The merger will ensure that the overall investment process of
VanEck can be more profitable and guarantees a better spread of the investments
and a more sustainable investment policy.
In the table below the differences and similarities between the Merging UCITS
and the Receiving UCITS are summarized.
Receiving UCITS Merging UCITS
General
Name VanEck Vectors Sustainable VanEck Vectors Global Equal Weight
World Equal Weight UCITS UCITS ETF
ETF
Management VanEck Asset Management B.V.
company
Depositary State Street Bank International GmbH Amsterdam Branch
Auditor Ernst & Young Accountants LLP
ISIN NL0010408704 NL0009690221
Size on 24 EUR 147.964.887,00 EUR 309.496.829,81
August 2021
Base currency EUR
Main Dutch Authority for the Financial Markets
supervisory
authority
Investment profile and risks
Investment The VanEck Vectors The VanEck Vectors Global Equal
policy Sustainable World Equal Weight UCITS ETF invests in 250 of
Weight UCITS ETF invests in the most liquid, highly
the 250 most liquid, most capitalised (free float) companies
highly capitalised (free from industrialised nations around
float) companies around the the world.
world, which must first · Globally equally weighted
satisfy the strict with a maximum allocation of 40%
sustainability criteria per region
defined by VanEck´s SRI · Innovative fee model with
policy and supported by the declining costs as the assets
analysis of VigeoEiris. under management rise
· Investment criteria
in three areas:
environmental, social and
corporate governance (ESG)
· Globally equally
weighted with a maximum
allocation of 40% per
region
· Long-standing track
record
· Strict
sustainability criteria
defined by our independent
research partner VigeoEiris
Benchmark Solactive Sustainable World Solactive Global Equity Index GTR
Equity Index GTR
Risk profile 6
Participant The Sub-Fund may not be suitable for investors who plan to
profile withdraw their money within 5 years.
Investors should be prepared to absorb significant, temporary
or long-term losses. Investing in the sub-funds is suitable
for investors who may incur a loss and are aware that they may
get back less than they invested.
Distribution Income is distributed
policy
Costs
Ongoing 0.3% which will be reduced 0.2%*
charges figure to 0.2% after the merger * With AUM of more than ? 200
million, 0.17% is charged on the
excess, and if ? 400 million is
exceeded, 0.15% on the excess.
0.13% is charged on the excess
above ? 1000 million.
Performance N/a
fee
Tax consequences
Corporate The sub-fund is subject to Dutch corporate income tax and can
income tax apply the special tax rate of 0% on its taxable profits.
treatment
Withholding In order to benefit from the special tax rate of 0% the
tax on sub-fund is obligated to distribute its taxable profits
dividend annually as dividend. These dividend distributions are subject
distributions to 15% Dutch withholding tax.
Withholding The sub-fund will in general meet the requirements to benefit
taxes on from the Dutch double income tax treaties. In general the
portfolio lower tax treaty rates for foreign withholding taxes on
income dividend income are applicable. In addition to that the
sub-fund will in general get a tax credit for the remaining
foreign withholding taxes and for the Dutch withholding tax on
dividends received. Thus the impact of foreign and Dutch
withholding tax on the performance at sub-fund level tends to
be almost zero.
Capital gains There is no Dutch capital gains tax applicable at sub-fund
tax level. The sub-fund is in general also not subject to foreign
capital gains tax on the securities due to local exemptions.
If foreign capital gains tax would apply the sub-fund will in
general meet the requirements to benefit from Dutch double
income tax treaties and would in general be protected from
foreign capital gains tax.
Consequences for participants of the Receiving UCITS
The participants of the Receiving UCITS will not be affected by the merger as
the transaction costs and costs for the merger are not for the account of the
participants of the Receiving UCITS. The inflow of assets is substantial,
however this will not impact the ongoing charges figure negatively. The ongoing
charges figure will be reduced from 0.3% to 0.2%.
Approval
According to the Articles of Association of the umbrella funds to which the
Sub-funds belong and relevant regulations the board of directors of the
respective UCITS should approve the merger of the Sub-funds. Additionally,
approval of the merger by the supervisory authority, the Dutch Authority for
the Financial Markets (AFM) is required.
Process and timelines
- Participants can exit the Merging UCITS free of charge until 30 days
after announcement of the merger.
- The portfolio of the Merging UCITS will be adjusted to the extent
required to meet the parameters of the Receiving UCITS between 1 October 2021
and the date of the merger. During this time, trading in shares in the Merging
UCITS will be suspended.
- On the date of the merger the participants will receive shares pro rata
in the Receiving UCITS in accordance with the exchange ratio.
Important dates
- 7 July Approval request AFM
- 4 August Approval AFM
- 1 September Message to participants
- 1 October Final redemption possibility
for participants
- 8 October Merger
- 15 October Participant announcement on
completion merger
Costs
The legal and administrative costs of the merger are borne by VanEck. The
participants of the Sub-funds will not be charged for these costs.
Possibility to exit
Participants can exit the Merging UCITS free of charge from the announcement of
the merger until 5 business days prior to the merger.
The calculation method for the exchange ratio
The number of receivable shares in the Receiving UCITS will be calculated based
on the NAV of the current shares in the Merging UCITS. Participants will
receive the same value in shares in the Receiving UCITS. VanEck together with
the auditor of both Sub-funds will validate the calculation on the merger date.
All income receivable in the Merging UCITS after the merger will accrue to the
Receiving UCITS.
More information
Additional information on the Receiving UCITS can be found in the key investor
information document and the prospectus. The documents are attached to this
letter and for participants it is desirable to read this information. A copy
of the auditor's report on the merger is available upon request.
More information on the relevant Sub-funds can be found on the website:
www.vaneck.com
[1] The merger is performed in accordance with article 4:62a sub c Dutch
Financial Supervision Act (Wft) and art. / 2 sub 1 ad p iii UCITS Directive.
END
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