A corporate action is an event initiated by a company, like a dividend, liquidation, or merger, that directly impacts its shareholders, often influencing the company’s stock price, ownership structure, or financial strategy.
Companies carry out corporate actions to manage their financial structure, reward shareholders, or support growth and strategic goals.
Most corporate actions happen within an individual company that makes up each ETF. However, there are corporate actions that occur at ETF level, which require additional operational processes from investment platforms.
Types of Corporate Actions
The most common corporate actions that you (an investor) will be notified of, are;
Dividends - payment made by a company to its shareholders, usually as a distribution of profits.
Mergers - (also known as acquisition) when two companies combine to form one entity. As a shareholder, your existing shares are typically exchanged for shares in the new combined company, usually at a specific ratio or rate determined by the merger terms.
Delistings - the removal of a listed security from an exchange which can no longer be traded on the exchange.
How will I know if there is a Corporate Action?
We will aim to notify all clients holding ETFs that are subject to corporate action by email as soon as we’re notified. Please be aware, that there may be occasions where we’re notified at short notice.
Where Can I Get More Information on a Specific Corporate Action?
For detailed information, you can check the company’s official announcements, the London Stock Exchange website, or financial news websites.
For any questions on how a corporate action could affect your investment portfolio, please get in touch. Removing a fund
Following a corporate event the fund you were holding may no longer exist. In this case, the actual weight of the fund in the portfolio will go down to 0% as the value may have been transferred to a different fund or paid out as cash.
Following these changes you must review the target weights of your portfolio. This will ensure that AutoInvest, Rebalance and Portfolio Orders will continue to function properly.
Please follow this article if you need to review target weights and remove a fund: Remove a fund from your portfolio.