Accumulated ETFs in Switzerland, should I avoid them?

Investing / Portfolios
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Hi everyone, I am an European citizen and I plan to relocate to Switzerland next year, staying for at least 5 years and if everything goes smoothly - permanently.

I’ve been accumulating a portfolio in IBKR consisting of three ETFs:

  • 75% SXR8
  • 15% SXRV
  • 10% VWCE

All of them are accumulated ETFs and worked perfectly for my home country. But thanks to this wonderful community I understood that every year I would have to pay taxes in Switzerland for the dividends that are automatically re-invested. That sounds painful.

My question is, should I stick to my initial portfolio and pay taxes every year or switch to ETFs that do not include dividends? Maybe a synthetic ETF like Lyxor MSCI World UCITS ETF or a growth focused ETF like Vanguard U.S. Growth ETF? Or am I overthinking it :sweat_smile:

My goal is long term investing.

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Yes :slight_smile: Taxes are fairly low and dividends are a small part of the growth. IMO you should optimize for net return, not taxes.

If you want to optimize might make more sense to switch instead to an ETF where you can reclaim the US withholding.

(fwiw if you truly believe in your allocation – personally it’s a bit too US focused for me --, I’d question the VWCE part, a 5% non-US allocation is too small to significantly impact the returns)

edit: same for nasdaq vs. sp500, isn’t there a massive overlap esp. with the mag7?

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I agree with nabalzbhf here.

The 10% VWCE strike me as very odd. Essentially you have 3.5% stocks outside the US and you are very concentrated in the top 10 Nasdaq stocks over all the funds.

At that point just go 100% S&P 500.
This strikes me as a typical example of “Lets diversify with multiple funds, but actually it’s not diversified at all”

Other than that: It makes more sense to go with US domiciled etfs for US stocks, such as VOO for S&P 500, as you can reclaim US withholding tax, that is otherwise lost with Ireland domiciled etfs.
And yes distributing is a little easier to handle tax wise as well. It’s more straightforward.

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Thank you for your quick responses!

I should have said the protfolio is 100% S&P500 to avoid the confusion. I know it’s too US focused, I may change this in the future.

I’ll look into using VOO, that’s a good tip.

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I think there are some discussions on synthetic ETFs in the forum, but what I read as main question in between the lines is

Yes, you should.

I’m not aware for obvious loopholes to not tax your (or your ETF’s) dividend income.
Taxation does favor (expected) growth over dividends, but for me, that’s a completely different investment decision, not one I would do based on income taxes.

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I had 1:1 holdings of SSAC (almost the same as VWCE) and CSSPX (S&P500), however after 2 years or so I got annoyed at watching paint dry on the screen and switched to VWRL and IUSA (both distributing). The dividends aren’t anything to write home about, and I know they’ll be taxed the exact same regardless or distributing or accumulating, however from a purely psychological standpoint I prefer seeing them come in and reinvesting them as I see fit.

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