So I got a fast response to my question about fx spreads when selling a certain amount of s&p 500 etf & buying us pension etf at the same time. It basically confirms the message you linked to @Strabor.
"Step 1 - Personal Netting First of all, a personal netting per customer and per currency takes place. The fx netting is therefore not per fund but per currency (which gives more netting potential). Here the system calculates how much USD you buy in total and how much you sell across all funds. The remaining difference (positive or negative) then flows into the general netting. If you do not change your strategy but only exchange the USD fund, you have a (almost) perfect netting. Since your S&P500 position does not exactly match the target weighting due to market movements, your personal netting will not be entirely perfect. However, the buy and sell price should be almost identical in USD.
Step 2 - General Netting Anything that cannot be netted at customer level flows into general netting. The procedure is then the same as step 1, with netting again being carried out per currency (not per fund) across all customers in order to calculate the resulting effective markup. WIR Bank charges a premium of 0.75% on the net traded volume. Based on experience, this mark-up due to the netting was effectively around 0.5% in recent months. The basis is the current interbank rate at the time of trading. You pay the general spread on that (small) part of your trades that is not perfectly netted.
Conclusion : If you make a 1-1 switch to the new CSIF US Pension Fund (also in USD), you pay no spread (or at best a really minimal spread) due to the personal netting."
On @Strabor 's question about accumulating or distributing etf’s:
“Yes, all CS Index funds have been accumulating since 2019. The entire dividend income is therefore reinvested directly within the fund.”
Well theres no difference really. If you get paid a dividend e.g. a distributing fund, it just gets invested as per your asset allocation at the next rebalancing date. You might miss out up to one month for the dividend amount, not really something lose sleep on
I agree with you in principle, but the last few comments have been about fx spread losses & the (potential) “problem” with getting a dividend in USD distributed/paid out within VIAC, which is then exchanged to CHF in your VIAC account, and then exchanged back to USD and re-invested in a USD ETF would be the disadvantage that we are/were talking about. Would also “only” be 1-2% of the dividend yield (2-3%) of course, but still.
True its a similar issue as if you were to invest in VWRL in CHF at a swiss broker and get paid USD dividends. Receiving USD dividends and then rebalancing that cash into USD funds seems like something VIAC could easily start offering through pooling and netting, if not done so already
I also have a question regarding the new recommended funds. I wonder if it is really worth switching. For example the first ETF - pension fund mentioned:
iShares Core S&P 500 vs. CSIF US – Pension Fund
Yeah, having already been ripped off once by VIAC on absolutely ridiculous and unnecessary fx charges, I’m no longer eager in doing any more business with them without having all the facts from independent sources before hand. Please do tell how much you got charged and lost on the switch, if you’re doing it anyway.
I’m also waiting for zkb’s frankly to arrive next month before deciding if i’d want to pull the plug on my ishares etf.
In all honesty there is not one 3a pillar account that really does what I think it should; invest once and re-balance only on at client-defined / client chosen interval.
Let me explain; VZ rebalances every month (to align the portfolio allocation with the “strategy”), thus incurring sell and buy transactions to justify their 0.68% annual management fee.
What I believe clients need (especially those that understand that going long is the best strategy) is a 3a account that keeps the cost (and transactions low) and re-balances only at an interval of the client’s choice. I.e. if I choose to only rebalance once a year I would like to only pay 0.17% management fee (VZ quarterly mgmt. fee). Any freshly transferred money should obviously get allocated according to the client’s predefined strategy…
It’s a real shame (and also strange I find) that whilst the management cost on investment accounts can be deducted from your taxable income, the 3a incurred “management cost” can not be deducted from your taxable income (whereas it is - at least in my case - the highest incurred banking charge).
It seems in any case that the on-going cost reduction that VIAC offers is as yet the best in the market but I’d be interested to hear other perspectives…
Ausgabeaufschläge are often waived due to agreements in place anyway.
In all honesty, giving customers the choice of that interval is just overcomplicating things.
Additionally, a whole year is a rather long rebalancing interval. Given that, larger (non-) rebalancing „gaps“ can arise within a year, effectively considerably distorting the tracking of indices.
And I‘m not aware of any exchange-traded fund - let alone index tracking ones - that rebalance only once a year. It‘s monthly, maybe quarterly.
Therefore, I think they’re doing exactly what they should: keeping things reasonably simple while reasonably adhering to a given strategy.
Why should they? The management cost is incurred for an account that contains (yet-to-be taxed) untaxed money.
@San_Francisco I think I didn’t make myself clear; of course the ETFs need to rebalance regularly (their TER is only 0.1% anyway so that’s not where my complaint lies). However, within my 3a pillar, VZ (charging the big bucks at 0.68% annually) will make sell/purchase transactions to stick to the “defined strategy” (i.e. the split/allocation between Global/Swiss equity/ Real estate / Raw materials /cash / etc.) these transactions really amount to nothing at all (selling 10francs of this, buying 10 francs of that, yet still all in all some 10~15 transactions per month) irrespective of new funds coming in. This is rather futile and doing this once a year is more than enough for most investors.
the obermatt calculator is really skewed towards “their” solution. do not put trust in their sheet. Their assumptions are detached from reality.
a more accurate and transparent calculator can be found in my 3a Tutorial behind this link
Yeah, I figured out that Obermatt was very anti-3a for a long time. I see his sheet more starting point than solution. And I’ll look forward to look at yours.
In my case, I have also childcare-subsidies coming in due to “low” income. So I have more than the tax money alone at stake which complicates the calculus even more.
Now I have:
25% SPI extra
12% SMI
30% CSIF world ex CH (in USD)
rest is cash waiting for a dip like these days’ one
If I look for funds denominated in CH (no bonds), I see:
CSIF SMI (costs 0%)
CSIF SPI extra (0%)
UBF ETF SLI (0.2%) not sure how this one differs from the SMI above - need to check
CSIF CH real estate (0%)
Would it make sense to find a balance between only these funds to avoid the high fees on USD/CHF conversion?
The assumption is that I have the rest of the world covered in IB, in USD and EUR, and VIAC would only have enough funds to justify exposure to CH market.
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