Amundi puts together ETFs: What investors should now know

• Amundi puts two ETFs together on the MSCI World on February 21st
• Fusion happens automatically for investors
• Dowing tax but also advantages by changing the fund domicile to Ireland

Amundi, one of the leading ETF providers in Europe, has already merged numerous ETFs in the past. In 2023 alone, Amundi merged 65 ETFs, according to “Insurance Book” to reduce costs and eliminate double structures that were created after the Lyxor was taken over in 2022.

The current merger concerns the Amundi MSCI World V (LU1781541179), which also came to Amundi in the course of the Lyxor takeover and will be dissolved on February 21, 2025. His assets are transferred to the Amundi MSCI World (IE000BI8ot95), which was only launched around a year ago. According to the fund company, both index funds are approved in numerous countries, including in Germany, Austria and Switzerland.

For these reasons, Amundi merges the two ETFs

Amundi should hope for deeper costs and higher earnings from the fusion of the two ETFs. Because instead of two fund management, the company only has to pay for one. In addition, fund companies occupy more fees at large funds, while the costs are independent of the volume. “At funds, the fund company only earns money when a large volume has been reached,” said Daniel Bauer from the protection community of investors (SDK) according to “N-TV”.

If one ETF is transferred to another, this is also better for the provider than liquidating the index fund that is no longer desired. Because then customer funds can be potentially lost because they are paid out and possibly no longer invested in a product of the same provider. With a merger like in this case, however, they are simply taken away.

This is how the ETF fusion expires

As Daniel Bauer from the protective community of investors (SDK) further explained according to “N-TV”, the technical process of the merger was relatively simple: Both fund assets would be rated on the fusion tinging day and then merged. “Depending on the exchange ratio, which results from the two fund assets – assets B by assets A – the corresponding shares in fund A,” said Bauer, depending on the exchange ratio. The investors themselves do not have to do anything: for them, the shares of the ETF that merges into the other simply disappear from the depot and the shares of the other ETF are automatically booked in the appropriate ratio.

As “Stiftung Warentest” according to “N-TV” confirmed, there were no differences in the design of the two ETFs. Costs, use of earnings, replication method – in this case a physical replica and investment strategy are identical, so that the new ETF should also match the investor’s investment strategy. However, the “Stiftung Warentest” advises whether the custodian bank offers the new ETF for sale at all and if so, whether the conditions match here. Because often not all depot providers have all ETFs on offer and often a discounted purchase is offered for some ETFs, in which fees are partially issued – but not for everyone.

However, there is still a weighty difference between the two ETFs – and it can cost investors a lot of money in the course of the fusion: the domicile. Because while the old ETF is based in Luxembourg, the new ETF Ireland has as a fund domicile.

Merging brings tax consequences for investors

When age and new funds come from the same country, the exchange of fund shares is treated tax-neutral according to “N-TV”. With Amundi, however, this is not the case here and ETF merging thus harbors tax implications, especially for investors in Germany. Since the ETF affected by the dissolution was native to Luxembourg and the new ETF comes from Ireland, the German Treasury evaluates the transaction as a fictional sale and new purchase of the shares, because the money moves to Ireland. This means that accrued price gains are taxable and investors have to pay compensation tax.

For investors from Germany, the merger means a direct confrontation with the complete tax burden, which would otherwise have been postponed or divided through compensation. As a rule, the custodian bank absorbs the due taxes after the merger from the clearing account. If this is not sufficiently covered or a expected financial bottleneck caused by the tax payment, investors should consider selling a suitable amount of ETF shares to cover the expected financial hole before the merger.

According to “Spiegel”, there are also tax effects for investors from Switzerland: Course gains at ETFs are not taxable for private investors, but the purchase and sale of ETF shares of stamp tax are subject. Since the two ETFs are based in Luxembourg and Ireland, the sales tax of 0.15 percent for foreign domiciled funds and ETFs is based on the purchase and sale.

Advantages by moving to Ireland

Despite the short -term tax burden, the merger could also have a positive effect on investors in the long term. The ETF, based in Ireland, benefits from lower taxes on US dividends because Ireland has better tax agreements here. Since the MSCI World Index, which serves as the basis for ETFs, consists of more than 70 percent of US shares, this can bring a return advantage. Instead of 30 percent like in Luxembourg, US dividends in Ireland are only taxed at 15 percent.

Thomas Züttel, Head Fund Research at VZ Depotbank AG, therefore rates the change positively according to “ExtraEtf”: Investors are then again in an “ideal” investment class, but with a lower dividend taxation. “From this point of view, a change of the domicile certainly makes sense,” said the expert.

What should investors do now?

Investors who want to switch to the new ETF based in Ireland do not have to do anything. The changeover takes place automatically, and the new shares are booked up in exchange against the old ones in the depot. However, you should calculate the resulting tax load and ensure sufficient cover in your clearing account.

Investors who do not want to participate in the merger, but want to actively switch themselves to the new or a completely different ETF, can sell their ETF shares in advance and then make a completely new investment decision with the capital. There are no disadvantages for tax purposes, since taxes have to be paid for the profits that have been launched so far, but there are additional costs for the sale and purchase of new ETF shares.

In this case, however, the investors concerned should hurry: According to “ExtraEtf”, shares of the old ETFs are no longer tradable from February 14th due to a freeze. “Aktiengram.de” are written by the brokers Ing and Trade Republic, in which February 12th and February 18 are given as the last possible sales day. No matter which date is right: If you want to sell, you should do this as soon as possible.

Editor finance.net