Anti-dilution Levy (ADL) mechanism applied to Index Fund share classes of BNP Paribas Easy (a Luxembourg domiciled SICAV). It aims to protect the interests and fair treatment of BNP Paribas Easy Funds’ shareholders Please note that ADL² are not charged to ETF investors who buy and sell the shares on a stock exchange (secondary market). However, ETF investors will pay brokerage fees to their intermediaries and potentially local taxes. Information is available in the BNP Paribas Easy Prospectus, book 1, page 17.
Subscriptions and/or redemptions can have a negative impact on the Net Asset Value (NAV) of the funds and this is particularly critical for an index fund knowing the importance of Tracking Error and Tracking Difference criterion for the selection of index funds by an investor. The impact is due to rebalancing costs “charged” to the fund to buy the underlying assets in case of a subscription (or sell the underlying assets in case of redemption). These costs (transaction costs, taxes and stamp duties…) affect all the shareholders and not only the ones who have just subscribed or redeemed the shares.
At BNP Paribas Asset Management, we chose to use the Anti-Dilution Levy (ADL) mechanism for our index funds. Such ADL² amounts, which are charged to subscriptions, conversions and/or redemptions, cover dealing costs for acquisition, disposal or sale of portfolio’s assets, any taxes and stamp duties that may apply. Their aim is to ensure that investors executing these transactions do not adversely affect the performance of the funds and thus other existing shareholders.
Anti-dilution Levy calculation is based on estimated costs, depending on the asset class replicated (Equity or fixed Income index) and on the replication type (physical or synthetic). ADL² (real & max) levels are downloadable from our website.
There are two types of ADL²: a Real ADL² level which is fixed per fund for creation (IN) and redemption (OUT) accordingly to current average spreads and potential taxes and stamp duties, and a Maximum ADL² which is the maximum that could be charged under exceptional market conditions. Any changes to ADL levels will be reflected in the file available in the section: News and then regulatory News of www.easy.bnpparibas.com
In reference to Anti-Dilution Levy and cut off revisions with regards to indexed funds, a special communication about new levels and cut off temporary reviewed time has reached clients on Monday March 30 (Notice to shareholders – link) and is available on BNPP Easy website (legal documentation)
Please find the notice for shareholders
News as of 01/04/2020
²ADL =Anti Dilution Levy
Investments in the aforementioned fund are subject to market fluctuation and risks inherent in investing in securities. The value of investments and the revenue they generate can increase or decrease and it is possible that investors will not recover their initial investment. Source: BNP Paribas Asset Management Holding.