A new low commission 3A/3rd pillar ETF solution from VIAC

Sorry it took me a while to answer, were some busy days lately :blush:

First of all congratulation to your very sophisticated analysis! You did a great Job!

In our view we would only add two things:

• The dividend yield you took into you calculation is derived from the Performance. In our view we think it’s better to take a fix rate of 2.5% or so (depending on the Focus; CH SMI around 3%; US SPX around 2%). With an assumed mean return of 4% and your formula the dividend yield is rather low which does not fully reflect tax advantages within the third pillar.
• The tax reduction in Zurich is quite low, it is important for the others to check it individually. WIR Bank offers one of the best calculators I have seen so far. https://www.wir.ch/nc/bank/private/vorsorgen/vorsorgerechner/
In Basel the tax deduction would be 1’685 which exceeds Zurichs 1’010 by far!
• In the beginning we planned to take US ETF for the US Market instead of the Irish one. As there are still some open issues with the Double Tax Treaty CH / USA, taking the irish one makes is better in our handling (witholding tax). We challengend the Tax Authorities (ESTV and SIF, Staatssekretariat für internationale Finanzfragen) regarding the DBA, the Change Protocoll and it’s role under the view of the FATCA. So far no positive results.
• Regarding your strategy, we will allow you to do your own with the release in Spring. The ivestment universe will even grow with some more asset classes and etf/funds!

For us it is a big win to have a community that helps us with ideas and challanges our view :blush: We are always happy to receive Feedback!

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About the insights meeting: I set up a doodle for a meet & greet!

https://doodle.com/poll/7ydacfwxw25zfvs5

Would be great if some of you can make it! I think near the HB makes sense!

Hey Guys

The decision has been made:

VIAC meet & greet
12.12.2017 @ 11:45 - 13:00

I would propose Spiga; cheap (good for us as startuppers) and italian food (works for everybody I guess)
https://www.google.ch/maps/place/Spiga/@47.3769637,8.5379997,15z/data=!4m2!3m1!1s0x0:0xbb9db18a6d394c0f?sa=X&ved=0ahUKEwiR-8uFhObXAhUPDewKHR1ODk0Q_BIIhwEwCg

Sorry, I had to post it here - wasn’t somehow allowed to post more…

Why does VIAC deposit Cash at the Terzo Vorsorgestiftung and pay only 0,3% interest when Terzo gives me 0,6% if I open an account there?
Is that a hidden fee?

This is very easy to answer: With our product we focus on the investing topic (cheap & efficient). Whereas the classic 3a accounts at Terzo address the “Zinslipickers”. In our view not having bonds in our predefined strategies and having them replaced by interest paying cash was a big win for us. We had some though negations about the interest level and are happy that it is that high compared to other offering in 3a investing field.

If the interest rate is very important to you, I would propose the following: open an account with us, set the allocation to 97% equity and only invest that fraction of the 6’768 that you reach your personal target allocation. i.e. 4’186.40 x 97%; so that it would be 60% out of the full 6’768. the rest of the cash with the bank of your choice; probably WIR Bank as well :slight_smile: But it Comes with some manual adjustments.:roll_eyes:

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So, overall this definitely looks interesting and refreshing on the 3a scene compared to everything else with frankly obscene fees.

How come there’s no currency hedging? I thought it was a legal requirement. Not that I miss, but… is this thing FINMA approved?

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Even if limits are mentionned in the law:

"Art. 55 Kategoriebegrenzungen

(Art. 71 Abs. 1 BVG)
Für die einzelnen Anlagekategorien gelten bezogen auf das Gesamtvermögen folgende Begrenzungen:

a.2 50 Prozent: für schweizerische Grundpfandtitel auf Immobilien, Bauten im Baurecht sowie Bauland; diese dürfen höchstens zu 80 Prozent des Verkehrswertes belehnt sein; Pfandbriefe werden wie Grundpfandtitel behandelt;
b. 50 Prozent: für Anlagen in Aktien;
c. 30 Prozent: für Anlagen in Immobilien, wovon maximal ein Drittel im Ausland;
d. 15 Prozent: für alternative Anlagen;
e. 30 Prozent: für Fremdwährungen ohne Währungssicherung."

The Swiss Federal Council federal Concil has precise this point in a comment during the law adaptation in 2008

Press release
FR: https://www.admin.ch/gov/fr/accueil/documentation/communiques.msg-id-21512.html
DE:https://www.admin.ch/gov/de/start/dokumentation/medienmitteilungen.msg-id-21512.html

Even if the limit are still in the law, the comment of the law
FR: https://www.newsd.admin.ch/newsd/message/attachments/13874.pdf
DE : https://www.newsd.admin.ch/newsd/message/attachments/13873.pdf

mentionned that if the pension fund manages without excessive risk the money under management it can go beyond the limit.
The law article 50 will have more importance than Art 55 which mentions explicitly the limit:

"Art. 50 Sicherheit und Risikoverteilung
4 Sofern die Vorsorgeeinrichtung die Einhaltung der Absätze 1-3 im Anhang der Jahresrechnung schlüssig darlegt, kann sie gestützt auf ihr Reglement die Anlagemöglichkeiten nach den Artikeln 53 Absätze 1-4, 54, 54a, 54b Absatz 1, 55, 56, 56a Absätze 1 und 5 sowie 57 Absätze 2 und 3 erweitern. Anlagen mit Nachschusspflichten sind verboten. Ausgenommen sind Anlagen nach Artikel 53 Absatz 5 Buchstabe c.4"

It’s a little tricky, but if you read the comment, it has been decided not to remove the article 50 with the explicit limit, because:
"
• Anlagekatalog und Begrenzungen sind nach wie vor für viele VE und Aufsichtsorgane
eine wichtige Orientierungsgrösse. Die Prudent Investor Rule beinhaltet
sinngemäss ebenfalls Begrenzungen. Klare quantitative Begrenzungskriterien
erleichtern den Vollzug und führen in der Praxis zu weniger Interpretationsschwierigkeiten.

• Annexeinrichtungen, bei denen die Risikofähigkeit und damit auch sinnvolle
kassenspezifische Begrenzungen nicht bestimmt werden können, benötigen
diese Vorgaben.
• Die Abschaffung von Anlagekatalog und Anlagebegrenzungen könnte eine
falsche Signalwirkung haben."

Waiting the confirmation from VAIC, I would say that their offer complies with the current law.

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Money transfer no issue. Very responsive on the chat. A couple of days after the 1st of the month you will see the assets invested in your chosen strategy. Since i put only some hundreds francs, they couldn’t fully replicate the global 100 strategy, but they got close enough. Looking forward to move all my 3a assets in 5 different portfolio there. Overall the nicest and more modern interaction i have ever had with a financial institution

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So, is this a better option than the Luzern Kantonal Bank which MP and swisscanto fund which MP recommended in the blog?

Yes this is really an interesting option.

One question I have on the index funds: VIAC writes no transaction cost and no product fees. But how about the entry and exit charges of the Credit Suisse funds? These are one-time, but hefty (5% and 2%).

Can someone comment if those are exempt, or remain as hidden cost?

Hey guys

Sorry that I wasn’t that active lately. First I had to create an new account - I was not allowed to post more than 3 times :slight_smile: Maybe someone can unlock my other account?

Let’s start with the regulations: When you think about a 3rd pillar foundation think of a “Pensionskasse”. All the restrictions apply to the foundation. You manage the money over all clients, not individually. This is what we do. The Terzo Vorsorgestiftung has already more than 850m AuM in Cash, which allows us to buy a lot of equities before reaching the 50%. Once this is reached you can even expand the restriction (first option). And if all customers would want to invest 100% in euqities we would ultimatly be allowed to cut it down on each strategy by the same share if needed (2nd option, ultimate solution).

We had multiple meetings with the regulator and help from several lawyers to go through with our solution.

Next question: The premium for the funds - all prospectus have such a clause, but they are mostly not active, so no surcharge, NAV is applicable.

See you all at 12.12. VIAC meet & greet!

VIAC meet & greet
12.12.2017 @ 11:45 - 13:00 Spiga

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I am looking at your account. If I am not mistaken, it is neither blocked nor suspended. can you PM me what is the issue exactly?

@Julianek I was only allowed to post 3 times with my old account, then I couldn’t post anymore (received a yellow message on the right hand side)

@Grog “Overall the nicest and more modern interaction i have ever had with a financial institution” - that would be a good thing to post on the app review :wink: Thank you for your feedback! Keeps us going even further! :smiley:

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So today I was the only one who showed up at Spiga to meet the VIAC guys who came from Basel to meet someone from this community (I wonder why other 5 forum users filled the doodle but did not come in the end?).

We had a nice chat and I have to say I got a positive impression. Daniel and Jonas have been very informative and friendly.

What surprised me is that they claim to have already ~200 million CHFs invested even though they only started 3 weeks ago! When I asked them something like “why did you bother coming to Zurich to meet 5 people (actually, just one person!) when you are getting so many new customers already?”, they replied that they wanted to connect to this community of smart and financially educated people.

Personally, I’ll consider using them for my 3 pillar this year. I am only a bit unsure still as I am not the early-adopter kind of guy and they are really just starting (though the cash is held at WIR bank and the funds at CS).

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Thanks for showing up yesterday! Eventough it was just you, it was an interesting lunch!

and it’s 2m CHF we manage allready, maybe 200m CHF in a few years :slight_smile: just to clarify. But we grow fast and receive a lot of transfer advices lately.

And the assets are held by the Terzo Vorsorgestiftung der WIR Bank. Overall the foundation holds more than 850m CHF, thereoff 2m CHF are now invested with the new product VIAC.

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@VIAC_Daniel & @VIAC I wish I could have joined you at Spiga but the Doodle was already full unfortunately. Next time maybe :smiley:

What is the legal status of VIAC, is it a cooperative like the WIR Bank itself (or Mobility, Vanguard)?
Will all profits be re-invested to develop the products and/or lower the costs for the customers/members?

With a cooperative status it would make it even easier to convince friends to open an account as not everyone understands why a low TER helps on the long run for an investment like the Pillar 3a or why it can help to diversify beyond cash.

the legal status is Aktiengesellschaft:
https://www.zefix.ch/en/search/entity/list/firm/1319063?name=viac&searchType=exact

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Hey guys

First, I would like to thank you for all those interesting questions!

Allow me to give you some details regarding our legal structure. The Accountholder has only a contract with the Terzo Vorsorgestiftung der WIR Bank. There is no other legal connection. The Terzo Vorsorgestiftung der WIR Bank then has two banking partners: WIR Bank for the Cash and Credit Suisse for all investments.

Furthermore, the WIR Bank operates VIAC, the product of the Terzo Vorsorgestiftung. That’s the relevant legal structure for the clients. VIAC Inc. is not relevant, we as a start up just came up with the idea and helped building the system and as know how partners. As it was our idea we wanted to call the product the same as our company – we thoughts that’s cool, but in the end it’s more confusing… If VIAC Inc. goes bust, it is not relevant for the clients – it’s holds no assets. The System would still be there, and nothing would have change for all our clients. We are just technologie provider and a think tank!

I hope this helps and keep in mind the bank who runs the system (WIR Bank) is a cooperative – customers before profits :wink:

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Different withholding tax treatment of ETFs vs. Swiss Pension Funds should be also considered together with the TER.

For example:
US ETF: dividend yield 2%, withholding tax ETF 15% Ireland, 30% otherwise, while for Swiss pension fund 0% is achievable
Swiss ETF: dividend yield 2.5%, withholding tax 35%, while for Swiss pension fund 0%
Rest of the world: dividend yield 2.5%, withholding tax say 25%, while for Swiss pension fund probably 15% treaty rate

for a portfolio 40% Swiss, 30% US, 30% RoW the difference could reach easily 0.5-0.6%

(ETFs benchmarks include dividends after the full withholding tax at offshore rate)

I understand that some 3a funds (e.g. Swisscanto) replicate the indexes themselves and can take advantage of the double taxation agreements and also of special agreements for pension money.
In any case the tax difference for the Swiss part of the portfolio would be significant (35% withholding tax for ETF vs. 0% for pension money).

maybe insiders can confirm or elaborate further…

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Sorry @balmung I’ve overlooked your post. Your are totally right about the withholding tax - it’s an important thing to look at when deciding which product to choose.

To clarify: 3a is not exempted from the withholding tax in the US. Our politicians f***ed that up with the the original DBA, as the US has some technical rules which apply and the 3a accounts where not covered with them. So the Swiss Government and the US planned to change that with an amendment protocol.

However, the amendment protocol was never ratified by the USA, as there was a tax dispute with Switzerland. Therefore, the status quo is still active.
In this matter, we have reached out to the ESTV and the SIF (State Secretariat for International Financial Matters) and wanted to put some pressure on them to finally make things work. Unfortunately without success - no one wants to put the head too far out of the window…

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Where have you found this info ? How Swisscanto could have a special agreement ?

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