Nomura's California tax-free ETF conversion stays on, with a fee cut to 0.35%

Nomura's plan to convert the Nomura Tax-Free California Fund, formerly the Macquarie Tax-Free California Fund, into an exchange-traded fund (ETF) is unchanged in an amendment filed Tuesday, Nov. 10, 2026. The reorganization is still expected on or about Feb. 19, 2027, shareholders will not be asked to vote, and the new fund's net fee would be 0.35%.

The amendment, Pre-Effective Amendment No. 2 to Form N-14, incorporates an information statement dated Nov. 5, 2026. The conversion has been public since a supplement dated Aug. 12, 2026, and Nomura ETF Trust II filed the original N-14 on Aug. 17, 2026.

A legal opinion on the tax consequences is a condition of closing, and it is still to be filed.

The new series would be the Nomura Tax-Free California ETF, a series of Nomura ETF Trust II, and its shares would trade on NYSE Arca. Gregory Gizzi, head of fixed income and municipal bonds, and senior portfolio managers Stephen Czepiel and William Roach would keep running it.

What holders would pay

The fee is the change a holder can measure. The mutual fund's management fee is 0.55%. The ETF's would be 0.35%.

Delaware Management Company, the adviser, has agreed to waive fees and cover expenses so the net expense ratio does not exceed 0.35% from the reorganization date for at least two years. Before that waiver, estimated total expenses are 0.47%.

About two-thirds of the money, the institutional class, already shows a net of 0.55% in the fee table. For that money the cut is from 0.55% to 0.35%.

As of Sept. 30, 2026, the classes held $226.9 million: $148.9 million in the institutional class, $76.9 million in Class A and $1.1 million in Class C. The filing estimates the ETF would start with $226.9 million.

The fee table, for the year ended Aug. 31, 2026, shows net expenses of 0.80% for Class A and 1.55% for Class C. Those figures include distribution fees the fund stopped charging on Sept. 1, 2026. That day it also stopped imposing sales charges, including a Class A charge of up to 4.50%.

With those distribution fees off, a contractual cap holds operating expenses to 0.55% through Dec. 29, 2026, for Class A and Class C as well. The filing sets no rate for the weeks after that cap ends and before the reorganization. It says lower expenses may not continue past the contractual periods.

Shareholders would pay most of the conversion's cost. The mutual fund would pay two-thirds of the reorganization costs, so that share comes out of the fund, and the adviser would pay one-third.

The costs are estimated at about $764,000 across the funds being converted. This fund's share is put at $45,224, using its net assets as of May 31, 2026. If the reorganization does not close, the adviser pays the reorganization costs.

The fund also expects to sell holdings to raise cash for shareholders who cannot hold the ETF. It estimates that trading cost at 0.10% to 0.20% of net assets as of May 31, 2026. The fund pays it, so holders who stay bear the cost of cashing out holders who leave.

Why it was approved

The adviser recommended the conversion for lower expenses and trading through the day. It said a conversion could reverse long-running net redemptions and spread fixed costs over a larger base. The fund had about $274.4 million in assets on July 31, 2026, and net assets of $226.9 million on Sept. 30, 2026.

The boards of both trusts approved the plan at a meeting on Aug. 11 and 12, 2026. They found it in the best interests of each fund and found that existing shareholders would not be diluted.

What shareholders would receive

The investment promise does not change. Both funds seek as high a level of current income exempt from federal income tax and from California personal income tax as is consistent with preservation of capital. Under normal circumstances, each puts at least 80% of net assets in municipal securities whose income is exempt from federal tax, including the alternative minimum tax, and from California personal income tax.

On the reorganization date, a shareholder whose brokerage account can hold an ETF would receive shares equal in value at net asset value, and cash for any fraction. That cash can be taxable.

The reorganization is intended to be tax-free for federal income tax purposes. The opinion to that effect is a condition of closing, and the funds have not asked the Internal Revenue Service for a ruling.

Before closing, the mutual fund expects to distribute its income and gains, which can create a tax bill of its own.

A holder without a brokerage account that can accept the shares would have them held by a transfer agent. If they are not moved into a brokerage account within a year, the plan is to sell them and send cash. The filing says that sale would be taxable.

Direct holders are told to transfer their shares to a brokerage account before the reorganization, or exchange into another eligible Nomura fund.

The California municipal ETFs already trading

The new fund would sit beside California municipal ETFs that charge less, and one priced near the proposed fee.

BlackRock reported $5.5 billion in net assets for iShares California Muni Bond ETF, CMF, as of Nov. 6, 2026, and lists an expense ratio of 0.08%. Vanguard lists a 0.06% expense ratio for Vanguard California Tax-Exempt Bond ETF, VTEC, in a profile dated March 2026.

JPMorgan Asset Management's fact sheet, dated Sept. 30, 2026, puts JPMorgan California Tax Free Bond ETF, JCAL, at $508 million, with a net expense ratio of 0.34% and a gross ratio of 0.44%.

At 0.35% after the waiver, Nomura's fee would be 0.29 percentage points above Vanguard and 0.27 percentage points above iShares. It would be 0.01 percentage point above the net fee JPMorgan lists.

Nomura's other conversions

This is one of three conversions in the Aug. 12, 2026, supplement. The Nomura Diversified Income Fund and the Nomura Limited-Term Diversified Income Fund are expected to convert on or about the same Feb. 19, 2027, date.

Nomura has already finished a separate pair. Nomura Asset Management's Nomura Small and Mid Cap ETF, SMDC, and Nomura Asset Management's Nomura Strategic Income ETF, MFIX, began trading on NYSE Arca on Nov. 9, 2026, after conversions that closed once trading ended on Nov. 6, 2026.

Before it can close

Either side can refuse to close if a condition is not met, and the two sides can abandon the plan by agreement. Any change to the February date is to be sent to shareholders. The lower fee arrives only if the conversion closes, and closing still waits on the tax opinion.