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Amundi is merging two MSCI World ETFs: What does this mean for you?
Digital innovations - Tax-optimized investments - Individual consulting
Amundi is merging two MSCI World ETFs: What does this mean for you?
Amundi merges two MSCI World ETFs: What's the reason behind it?
ETF provider Amundi has decided to merge its MSCI World V UCITS ETF ACC (ISIN: LU1781541179) with the MSCI World UCITS ETF ACC (ISIN: IE000BI8OT95). Such ETF closures and mergers are not uncommon: According to a report by ETFGI, over 600 ETFs were discontinued in 2024. An analysis by Morningstar shows that this mostly affects ETFs that are still new, have low trading volumes, high total expense ratios (TERs), and poor performance. In short: ETFs that are unattractive to investors and not very profitable for providers.
In this case, however, the situation is different: The fund in question is almost seven years old and currently manages more than $6 billion. But from the ETF provider's perspective, there are two significant disadvantages: The fund uses physical replication and was domiciled in Luxembourg – a tax disadvantage.
To receive a refund of US withholding tax, fund providers must prove who has invested in the fund. This is difficult for many ETFs, as providers typically don't know their investors. Ireland is an exception: It has an old double taxation agreement with the US that allows fund providers to partially reclaim US withholding tax on dividends. This tax saving positively impacts the performance of ETFs, giving Irish funds an advantage.
Amundi justified the merger by citing the "better framework conditions in Ireland for the treatment of US equities." The ETF that incorporates the other is domiciled in Ireland. For investors, the merger therefore presents a particular opportunity – especially for those looking to invest now.
What does the merger mean for you as an investor?
Things to consider during the merger:
There is one drawback, however: the tax office treats the merger like a sale, which means you'll have to pay taxes on your profits. Depending on how much you've invested, you should plan carefully to ensure you have enough money available. The merger will be completed at the end of February, so you still have time to prepare.
Unfortunately, this means that the tax deferral effect is lost. However, the total tax burden remains unchanged. This means that you will pay less tax overall when you withdraw the ETF later.
Since taxes will be due in any case, you can use the merger to check whether the ETF still fits your investment strategy. You could also sell it and invest the money in another ETF – however, this might incur trading fees.
Don't worry, there's no reason to panic.
Don't be too alarmed: The merger of these two large ETFs is an exceptional case – at least we are not aware of any other case of this magnitude.
While such situations are generally undesirable, they can also present opportunities. ETF providers typically aim for greater efficiency through mergers and closures, for example, by reducing costs. It's even possible that the new ETF will be better than the old one, with broader diversification and lower costs. Furthermore, a merger offers a good opportunity to review your portfolio and adjust your investment strategy if necessary.
Since the tax authorities treat this merger as a sale, it is taxable for all investors in the same account. Such mergers and mandatory taxations will occur repeatedly in the future, thus significantly impacting investors' long-term returns. An ETF-based pension plan protects against such mandatory taxation. Here you can find further information on tax-optimized ETF investing: https://b-k-consulting.com/produkte/fondsgebundene-rentenversicherung-etf/
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