Mandatory redemption of the ISEQ 20 ETF

Brendan Burgess

Founder
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54,687
I got a letter from Davy this morning telling me that my Wisdom Tree ISEQ 20 UCITS ETF has been redeemed.

It was the first I had heard of it. And I didn't have any options. The redemption was mandatory. There was no option to merge with another ETF or switch to another ETF.

The problem for me is that while I have unrealised capital gains on other shares , I now have a realised loss on this product. And I can't set the loss against any of the gains.

I had planned to hold onto this until it recovered to the price I paid for it.

I presume I am completely snookered?



Brendan
 
Brendan Burgess said:
I presume I am completely snookered?
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Pretty much - they are winding down this - along with a number of others. The notice didn't offer an option to switch (and I assume a switch would be viewed as a liquidation even by revenue in any case.

The bigger question for Davy's - the liquidation happened a month ago and they sent out notices in July it seems. Not sure why you are only getting notified and credited now
 
Thanks EmmDee

What worried me was that maybe I had an option which I had not exercised because I had not been notified. So while it would have been nice to know that this was happening, there wasn't anything I could do about it.

Brendan
 
The choice on the notificaiton from Wisdom Tree was to (a) sell the units before September or (b) wait for redemption proceeds after mid September.

So - I don't think you missed any options. Not a lot you could have done
 
EmmDee said:
Pretty much - they are winding down this - along with a number of others. The notice didn't offer an option to switch (and I assume a switch would be viewed as a liquidation even by revenue in any case.
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Did the notice say which other one's they're winding down?
 
I'm in a similar position. Got no notification until after the proceeds had been lodged to my bank. Also have unrealised gains on other shares.
 
Brendan Burgess said:
The problem for me is that while I have unrealised capital gains on other shares , I now have a realised loss on this product. And I can't set the loss against any of the gains.
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Why dont you sell some shares with gains to use up the loss on this etf. Afterall I thought you were selling down shares to 75% invested anyways. You could then buy a ftse 100 etf tracker instead, its trading at 20 year lows now.
 
That's another big disadvantage of European domiciled etfs not mentioned before, the possibility of getting kicked out of them at a loss and being unable harvest the cgt loss. I would be very annoyed myself and its something that you could not really foresee
 
joe sod said:
That's another big disadvantage of European domiciled etfs not mentioned before, the possibility of getting kicked out of them at a loss and being unable harvest the cgt loss.
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'Tis.

Certain ETF's with access to exotic investments do tempt me from time to time to diverge from the global world equity tracker approach.

However, it's worth keeping a beady eye on the assets under management (AUM) of these funds. A fund that fails to attract a level of assets that makes the economics worthwhile for the providers is more likely to be discontinued.

Taking your redemption proceeds and re-investing in a like-for-like alternative doesn't really help the investor as the investor could be paying tax on gains in the new investment thereby taking even longer to get back to their starting point and is sub-optimal as you say.
 
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