BlackRock has laid out options for iShares ETF investors to liquidate their holdings, reconfirming it will suspend the trading of five products from the ASX in about a month.
On May 3, BlackRock said it was pulling five iShares products from the Australian Securities Exchange and re- domiciling 14 from US to Australia to cut taxes for investors.
The scrapped iShares ETFs were indexed to Russell 2000, MSCI Singapore, Global Telecom, MSCI Hong Kong and MSCI BRIC. The group's ticker codes are: IRU, IXP, ISG, IHK and IBK.
BlackRock is giving investors until the close of trading on June 15 to sell the respective iShares stock. The five ETFs will be officially delisted on June 22.
The second option investors have is to request BlackRock, by August 28, convert CHESS Depository Interests (CDIs) into shares into the corresponding US iShares ETF.
BlackRock is covering the conversion costs but investors will need a brokerage account that can trade US listed shares to do this.
A day later, on August 29, the manager will automatically sell remaining ETFs on behalf of the CDI holders, sending them sale proceeds within 10 days of the sale.
The asset manager will shortly send out letters to all CDI holders giving details of these options.
With the restructure, BlackRock is moving towards a locally-domiciled product range and the 14 ETFs to remain on the ASX held than $7 billion in assets as at March 31.
Its 120,000 unit-holders have yet to vote on the ETF restructure. This will be held on 22 June 2018, BlackRock confirmed.
When it first brought the iShares products to Australia, cross-listing the US domiciled ETFs on the ASX was "drastically" less costly than building them from the scratch, iShares Australia head Jon Howie told Financial Standard on May 3.
The standard withholding tax rate applied for distribution is 30%, but if Australians submitted a form to the US tax authorities, they can reduce it to 15%, Howie said.
He said the problem is the US taxation process isn't easy to understand and Australians must be re-certified every three years - which can be frustrating for investors.
With this new structure, BlackRock will handle all the tax paper at the fund level and the end investors won't have to worry about it, he said.
"We have been listening to investors about the administrative burdens and we expect a very positive response, particularly if you consider financial advisers who have numerous clients invested in these products," Howie said.
"We expect advisers will be over the moon that we now have complete consistency across our entire product range," he said.