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 World
Equal Weight UCITS ETF |
VanEck Vectors Global Equal Weight
UCITS ETF |
Management company |
VanEck
Asset Management B.V. |
Depositary |
State
Street Bank International GmbH Amsterdam Branch |
Auditor |
Ernst
& Young Accountants LLP |
ISIN |
NL0010408704 |
NL0009690221
|
Size on 24 August 2021 |
EUR 147.964.887,00 |
EUR 309.496.829,81 |
Base currency |
EUR |
Main supervisory authority |
Dutch
Authority for the Financial Markets |
Investment profile
and risks |
Investment policy |
The VanEck Vectors
Sustainable World Equal Weight UCITS ETF invests in the 250 most
liquid, most highly capitalised (free float) companies around the
world, which must first satisfy the strict sustainability criteria
defined by VanEck´s SRI policy and supported by the analysis of
VigeoEiris.
· 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 |
The VanEck Vectors
Global Equal Weight UCITS ETF invests in 250 of the most liquid,
highly capitalised (free float) companies from industrialised
nations around the world.
· Globally equally weighted with a
maximum allocation of 40% per region
· Innovative fee model with declining
costs as the assets under management rise |
Benchmark |
Solactive Sustainable World Equity
Index GTR |
Solactive Global Equity Index
GTR |
Risk profile |
6 |
Participant profile |
The
Sub-Fund may not be suitable for investors who plan to 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 policy |
Income is
distributed |
Costs |
Ongoing charges figure |
0.3% which will be reduced to 0.2%
after the merger |
0.2%*
* 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 fee |
N/a |
Tax
consequences |
Corporate income tax treatment |
The
sub-fund is subject to Dutch corporate income tax and can apply the
special tax rate of 0% on its taxable profits. |
Withholding tax on dividend
distributions |
In order
to benefit from the special tax rate of 0% the sub-fund is
obligated to distribute its taxable profits annually as dividend.
These dividend distributions are subject to 15% Dutch withholding
tax. |
Withholding taxes on portfolio
income |
The
sub-fund will in general meet the requirements to benefit from the
Dutch double income tax treaties. In general the lower tax treaty
rates for foreign withholding taxes on 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 tax |
There is no Dutch capital gains tax applicable at sub-fund
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.