CI GAM’s 2025 Reinvested Distribution in ETFs: Capital Gain & Tax Consequences

CI Global Asset Management has introduced reinvested distributions for a small set of its ETFs, to be executed at the start of 2026—in effect, a supplementary distribution beyond what was already scheduled or confirmed in its annual capital gains release. These extra distributions are non-cash: investors will receive additional units, followed by an immediate consolidation so total units held remain constant. Thus there is no change in unit count, but there may be meaningful impacts on cost base and reported taxable amounts that investors need to account for. [1]

In detail, the announcement covers four ETF series: CI Galaxy Bitcoin ETF (BTCX.U), CI Morningstar National Bank Québec Index ETF (QXM), CI Galaxy Solana ETF (SOLX.U), and CI Morningstar Canada Momentum Index ETF (WXM). The distribution amounts per unit are respectively US$0.0048 (0.03%), $0.0065 (0.02%), US$0.0110 (0.12%), and $0.0074 (0.02%)—reflecting very modest rates of return. [1]

These amounts are unusual in that they are in addition to the annual confirmed reinvested capital gains distributions announced December 30, 2025, which already set percentages ranging from ~1.0% for BTCX.U to >10% for SOLX.U, with similar large distributions for momentum-based ETFs. [2]

Strategic implications for investors include:

• Cost basis adjustment: Since these reinvested distributions are not cash but affect adjusted cost base, investors will need to update their tax records, especially for taxable accounts. The consolidation mechanism keeps unit count constant but changes per-unit value. [2]
• Tax timing: Additional distributions early in 2026 for record holders as of December 30, 2025 will need to be recognized in 2025’s tax filings, even though reinvestment happens in 2026. [2]
• Portfolio drag vs. benefit: While 0.02–0.12% additions are small, combined with annual distributions they modestly amplify long-term returns—but also potentially administrative/tax burdens for small-balance investors.
• Market signaling: CI GAM may be responding to unexpected net income or capital gains late in the tax year, or optimizing for tax and regulatory treatments near fiscal year-end.

Open questions to watch:

• Will similar additional distributions be implemented next year for the same ETFs, or was this an isolated adjustment?
• How do these reinvested distributions interact with foreign withholding, U.S.-dollar series tax rules, and cross-border investor implications (e.g. for U.S. persons)?
• Given their small size, what is the administrative burden relative to benefit for small vs. large holders?
• Are there performance or net asset changes tied to these distributions—and how will they affect ETF tracking and liquidity?