425: Voya Funds Announce Reorganization Plan

Voya Mutual Funds announces a plan to reorganize two funds, IAE and IHD, into the MM EME Fund, aiming to provide liquidity and continued emerging markets exposure.

Summary

• Voya Investment Management Co. LLC (Voya IM) has announced plans to reorganize the Voya Asia Pacific High Dividend Equity Income Fund (IAE Fund) and the Voya Emerging Markets High Dividend Equity Fund (IHD Fund) into the Voya Multi-Manager Emerging Markets Equity Fund (MM EME Fund).
• The Boards of Trustees for all three funds have approved the reorganization agreements.
• Shareholders of IAE Fund and IHD Fund will become shareholders of MM EME Fund if the reorganizations are approved.
• The primary goal is to offer shareholders of the Target Funds liquidity while maintaining investment in an emerging markets strategy.
• The proposed effective date for the reorganization is on or about October 16, 2026.
• Shareholder meetings are scheduled for on or about September 28, 2026, with proxy statements and prospectuses distributed on or about August 28, 2026.
• Shareholders of IHD Fund are expected to see a decrease in their contractual expense limit and management fee rate.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral to slightly positive development, primarily driven by the potential for improved expense ratios and continued exposure to emerging markets, though past performance variations and tax implications introduce some complexity.

Positives

• Shareholders of IAE Fund and IHD Fund will have the opportunity to benefit from a potential decrease in their contractual management fee rate.
• Shareholders of IHD Fund are expected to experience a decrease in the contractual expense limit.
• The reorganization aims to provide shareholders of the Target Funds with the opportunity to achieve liquidity for their shares at net asset value.
• Shareholders will continue to be invested in a fund that provides exposure to an emerging markets strategy.
• The surviving fund, MM EME Fund, has superior one-year performance compared to the Target Funds and stronger performance relative to IAE Fund and IHD Fund at market price over several prior periods.
• The reorganization is intended to qualify as a tax-free reorganization under U.S. federal income tax purposes.

Negatives

• There are periods during which IAE Fund and IHD Fund outperformed the Surviving Fund (MM EME Fund).
• Shareholders may pay more in taxes or pay taxes sooner than they would have had the reorganization not occurred due to taxable distributions of undistributed income and capital gains prior to the closing date.
• The ability of the combined fund to use pre-Reorganization losses in the future depends on various factors and may be limited.
• For five tax years, one fund's pre-acquisition losses cannot be used to offset unrealized gains in the other fund that are built in at the time of the reorganizations and exceed certain threshold amounts.
• The benefit of capital loss carryforwards and built-in losses are currently available only to pre-Reorganization shareholders of each Fund; after the Reorganizations, the benefit will inure to all post-Reorganization shareholders of the combined fund.

Risks

• Investing involves risks of fluctuating prices and uncertainties of rates of return and yield, and investors could lose money.
• Specific risks associated with MM EME Fund include China Investing Risks (including Stock Connect and Variable Interest Entities), Convertible Securities, Credit, Currency, Derivative Instruments, ESG factors, Focused Investing (Technology Sector), Foreign (Non-U.S.) Investments/Developing and Emerging Markets, Growth Investing, High-Yield Securities, Index Strategy, Initial Public Offerings, Interest Rate, Investment Model, Liquidity, Market, Market Capitalization, Market Disruption and Geopolitical, Other Investment Companies, Preferred Stocks, Prepayment and Extension, Real Estate Companies and REITs, Securities Lending, and Value Investing.
• Past performance of the funds is not a guarantee of future results.
• The performance information for IAE Fund and IHD Fund prior to May 6, 2019, reflects returns from a different sub-adviser and investment objective/strategies, meaning historical performance may not be indicative of future results under the current structure.
• Changes to sub-advisers and investment strategies for MM EME Fund have occurred, meaning past performance reflects different strategies and sub-advisers.

Future Outlook

The reorganization is expected to provide shareholders of the target funds with liquidity and continued exposure to an emerging markets strategy, with a planned effective date of October 16, 2026. The surviving fund, MM EME Fund, is managed by a team with experience in quantitative equity and asset allocation.

Management Comments

• Voya Investment Management (Voya IM) has announced the following changes: Planned Effective Changes (On or About) October 16, 2026.
• The Boards of Trustees (the Board) of Voya Asia Pacific High Dividend Equity Income Fund (IAE Fund), Voya Emerging Markets High Dividend Equity Fund (IHD Fund), and Voya Multi-Manager Emerging Markets Equity Fund (MM EME Fund) each approved an Agreement and Plan of Reorganization.
• Voya Investments (Voya Investments or the Investment Adviser) proposed the Reorganizations primarily to provide shareholders of the Target Funds with the opportunity to benefit from the ability to achieve liquidity for their shares at net asset value while continuing to be invested in a fund that provides exposure to an emerging markets strategy.

Industry Context

StockSavvy.ai notes that fund reorganizations are common in the asset management industry, often driven by a desire to consolidate assets, improve operational efficiencies, reduce expenses for shareholders, or align strategies with market demand. The move by Voya IM to merge two dividend-focused equity income funds into a broader emerging markets equity fund suggests a strategic shift or a response to investor preferences for emerging market growth opportunities.

Comparison to Industry Standards

• The filing does not provide specific comparisons to industry standards or benchmarks for the reorganization itself, but it does compare the performance of the Target Funds (IAE and IHD) and the Surviving Fund (MM EME) against broad-based securities market indices and additional indices with similar investment characteristics.
• For example, MM EME Fund's primary benchmark was changed from the MSCI Emerging Markets IndexSM to the MSCI ACWI ex-U.S. IndexSM in 2024, indicating an adjustment to better reflect its investment strategies in line with regulatory disclosure requirements.
• The filing notes that MM EME Fund has superior one-year performance compared to the Target Funds and stronger performance relative to IAE Fund and IHD Fund at market price over a number of prior periods, though there were also periods where the Target Funds outperformed MM EME Fund.

Stakeholder Impact

• Shareholders of IAE Fund and IHD Fund will become shareholders of MM EME Fund, potentially benefiting from lower expense ratios and management fees.
• Shareholders may face tax implications due to taxable distributions of undistributed income and capital gains prior to the reorganization.
• The ability to utilize pre-reorganization capital loss carryforwards may be affected for shareholders.
• The investment strategy and portfolio management team will change for shareholders of the Target Funds, as they will transition to MM EME Fund.

Next Steps

• Shareholders of IAE Fund and IHD Fund will receive a combined proxy statement and prospectus.
• A shareholder meeting will be held on or about September 28, 2026, to vote on the proposed reorganizations.
• If approved, the reorganizations are expected to be effective on or about October 16, 2026.

Key Dates

Keywords

fund reorganization, mutual fund, emerging markets, Asia Pacific, Voya, investment management, equity fund, shareholder meeting