Amundi, Europe’s biggest asset manager, has informed investors that it is moving seven of its ESG funds out of Luxembourg to consolidate them with new umbrella ESG funds that it has created in Ireland. The move is aimed to achieve “a greater degree of operational efficiency,” the Paris-based firm said.
Collectively, the switch means that some 10.7 billion euro in assets under management will leave Luxembourg to find a new home in Dublin. The biggest fund is the Amundi Index MSCI USA SRI PAB Ucits ETF, which holds about 5.64 billion euro. In September Amundi already shifted 6.57 billion euro from Luxembourg to Dublin.
The seven funds will be consolidated into the during the coming weeks with various sub funds that Amundi has registered by the Bank of Ireland, the country’s financial regulator. Amundi registered a total of 29 sub funds under the Amundi ETF Icav umbrella vehicle in Ireland during the last two years.
Lower withholding tax on dividends
Ireland is considered more attractive as a domicile for ETFs with US equity exposure because of tax benefits stemming from the Irish-US tax treaty. Dividends paid by US companies to Irish-based funds are only taxed at 15 percent, against 30 percent for Luxembourg and many other European countries.
Luxembourg is home to approximately 5,000 billion in assets, mostly held in Ucits funds. The Grand Duchy is the second-biggest domicile for ETF assets in Europe, after Ireland. Assets in Irish ETF this summer for the first time topped the level of 1,000 billion euro, whereas Luxembourg hosted 295 billion euro in ETF assets at the end of June, compared to 183 billion or the rest of Europe.
A relatively small tax difference can have a significant impact on the returns for investors over the longer term, especially at a time when costs are increasingly considered and asset managers face more and more pressure to become more efficient.
“This consolidation will lead to benefits of scale in the long term and a greater degree of operational efficiency, both of which should benefit the shareholders of the transitioned ETF classes in the longer term,” Amundi told investors.
‘Ongoing review’
Investors throughout Europe were notified about the transition via a series of investor notices published on the Amundi website during October. These notices, approved by Luxembourg regulator CSSF, state that the relocation of the ETFs is part of an «ongoing review of product range competitiveness and client interest assessment.»
The seven Luxembourg funds concerned are:
- Amundi Index MSCI USA SRI PAB Ucits ETF
- Amundi Index MSCI North America ESG Broad CTB Ucits ETF
- Amundi MSCI World Climate Transition CTB
- Amundi MSCI World Climate Paris Aligned PAB
- Lyxor MSCI World Climate Change (DR) UCITS ETF
- Lyxor Net Zero 2050 S&P World Climate PAB (DR) UCITS ETF
- Amundi Index MSCI Emerging ESG Broad CTB
Amundi’s Irish ESG Icav will also absorb one of Amundi’s French funds - the 1.4 billion euro Lyxor MSCI USA ESG Broad CTB (DR) - before the end of the year. As part of the transition operation, the Paris-based firm also will rename a number of its Lyxor funds to the Amundi brand.
After registering 24 ETFs in Ireland last year, it added another five additional ones in July. One of Amundi’s newest funds in Ireland is the Amundi MSCI World Catholic Principles Screened Ucits ETF, which also will be a sub fund of the Amundi ETF Icav, according to a prospectus released in August.