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For index-tracking ETFs, what happens when one of the index constituents has a rights issue? Do the ETFs subscribe to the rights issue, do they ignore the rights, or do they sell the rights? If they do subscribe, where do they get the cash to do so? If they sell the rights, what do they do with the resulting cash?
In particular, I am interested in the behavior of these two index ETFs:
The goal of the ETF is to follow the index as closely as possible. They would manage the rights in accordance with how the index handles the rights. If the index is adjusted to include the rights then the ETF should hold those rights as well.
The specifics should be in their prospectus, or if there are specific cases, the ETFs investor relations department should be able to provide details.
