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Blackrock Australia has recently announced that they will be converting 14 of their iShares US domiciled ETFs to Australian domiciled ETFs, removing the pesky W8-BEN form as a requirement for investors in these products. They are also closing 5 ETFs.
Blackrock Australia has recently announced that they will be converting 14 of their iShares US domiciled ETFs to Australian domiciled ETFs, removing the pesky W8-BEN form as a requirement for investors in these products.
We took a look at the ETFs listed on the ASX last year which are cross listed. There are 25 in total. Removing these 14 in the list will greatly reduce the amount of these, making admin for Australian investors much simpler.
Internationally domiciled ETFs (cross-listed) are where an ETF is already established and running in another country (generally the USA). As long as the ETF meets certain criteria, the ASX allows the fund to be listed in Australia, however for all intents and purposes the fund is a resident of its home country, and governed by their legal and tax system. As a result the fund is considered ‘cross-listed’. For non residents, US withholding tax on distributions is 30%, however with a tax treaty with Australia, this tax rate can be reduced to 15%, if the investor filles out a ‘W8-BEN’ form. A form that must be completed and mailed every 3 years. For first time investors in these funds, this can be confusing and a seeminly unnecessary admin burden. There are also estate planning considerations with these cross-listed products, with death taxes applying to estates of deceased holders of these funds.
By converting these 14 products to locally listed, iShares have simplified these products for local investors. The added advantage is they are now able to offer dividend reinvestment, something that was unavailable on the cross-listed products. Full details can be found in the ASX announcement.
The list of ETFs are listed below:
| Ticker | Name | Provider | Mgmt Fee | Mkt Cap |
| IAA | iShares Asia 50 ETF | Blackrock | 0.50% | $429m |
| IEM | iShares MSCI Emerging Markets ETF | Blackrock | 0.68% | $668m |
| IEU | IShares Europe ETF | Blackrock | 0.60% | $842m |
| IJH | iShares Core S&P MidCap 400 | Blackrock | 0.07% | $145m |
| IJP | iShares MSCI Japan ETF | Blackrock | 0.48% | $245m |
| IJR | iShares Core S&P SmallCap 600 | Blackrock | 0.07% | $115m |
| IKO | iShares MSCI South Korea Capped ETF | Blackrock | 0.62% | $43m |
| IOO | IShares Global 100 ETF | Blackrock | 0.40% | $1,388m |
| IRU | iShares Russell 2000 ETF | Blackrock | 0.20% | $77m |
| ITW | iShares MSCI Taiwan ETF | Blackrock | 0.62% | $45m |
| IVE | iShares MSCI EAFE ETF | Blackrock | 0.33% | $329m |
| IVV | iShares Core S&P 500 | Blackrock | 0.04% | $2,567m |
| IXI | iShares Global Consumer Staples ETF | Blackrock | 0.47% | $109m |
| IXJ | iShares Global Healthcare ETF | Blackrock | 0.47% | $501m |
| IZZ | iShares China Large-Cap ETF | Blackrock | 0.74% | $102m |
In a reasonably uncommon move in Australian ETFs, iShares have also announced the closure of 5 of their lower inflow ETFs. All have market capitalisations of under $100m, and have obviously been deemed non commercial by iShares. These products were also cross-listed, meaning upon closure only a total of 6 cross listed ETFs will remain.
Investors in these funds have until 15 June 2018 to sell their shares, or else they will be sold on their behalf in August 2018. Full details can be found in the announcement from iShares.
The list of products closing are listed below:
| Ticker | Name | Provider | Mgmt Fee | Mkt Cap |
| IBK | iShares MSCI BRIC ETF | Blackrock | 0.68% | $39m |
| IHK | iShares MSCI Hong Kong ETF | Blackrock | 0.48% | $16m |
| IRU | iShares Russell 2000 ETF | Blackrock | 0.20% | $77m |
| ISG | iShares MSCI Singapore ETF | Blackrock | 0.48% | $7m |
| IXP | iShares Global Telecom ETF | Blackrock | 0.47% | $50m |
Whilst certainly not as exciting as the above, to round out the recent changes by iShares, they have recently performed a share split on the IOO, IXI and IXJ funds. Investors in these products may have noticed they have twice the amount of shares now, this is due to the 2 for 1 share split that they have undertaken. Nothing has changed, it has just meant the unit prices are halved and holders now have twice as many shares. Expect notifications from your broker in the coming weeks.
With the move to Australian listing and closure of some small ETFs, only 6 cross-listed ETFs will remain in Australia. We see this as great news for investors, simplifying administrative requirements and creating a level playing field across the whole market.
[…] the new listings, iShares this year converted 14 of their internationally domiciled ETFs to be Australian domiciled, removing the need for investors in these ETFs to complete W8-BEN forms in order to avoid […]