Better diversify with EM or REIT ETFs?

I get it and should stop worrying about all these details. As far as I understand that’s exactly the point of FIRE, just invest as simple as possible and don’t think too much about all these details. Still it is very interesting to speak about and I have learnt quite a few things here in the post. Thanks again for your detailed answers!

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I know, it’s very fascinating. I watched all videos from Ben Felix (IMO the greatest financial Youtube channel out there, the podcasts are also worth listening too!), read books, papers from MSCI, Vanguard, Fama & French and other sources. I was trying to optimize my portfolio, increase diversification and maybe boost my returns. But in the end I realized that doing anything different from owning VT is just an active bet on a certain outcome. And why should I know any better?

I think when investing becomes the most boring thing in your life, you are on the perfect path.

P.s. There is a valid argument for home bias (there are a couple of papers from Vanguard). I also asked Ben Felix on Linkedin, he invests 30% in Canada and 70% in the rest of the world according to market cap weights. It makes sense if you are living in a country with a different currency than USD to have some hedge on currency risks. That’s why it’s totally plausible to invest 15-30% of your whole assets in SMI/SPI Extra. I’m personally aiming for a 15% Swiss allocation overall, so that’s why I set VIAC to 18% SMI and 30% SPI Extra. Which leads (together with the rest of my assets) to the desired 15% allocation.

May I ask you which ETF you invest in to cover the SPI Extra or SMI/SPI Extra as you mention?

The ones from VIAC. I don’t have any Swiss assets outside of it, which makes it tax-efficient anyway (as Swiss companies are paying out a lot of dividends which aren’t taxed in 3a).

Right, that’s a good point with tax-efficiency within 3a. I have myself just started with VIAC Global 100 this year and checked, the global 100 includes for June 2020 9.25% of SPI Extra and 27.75% of SMI (source: https://viac.ch/wp-content/uploads/VIAC-Global-100-DE.pdf). They seem to mostly use index funds from credit suisse for this purpose.

The only downside with a 3a is that based on the legal max amount you can pay per year (around 6800 CHF) you will never be able to invest at best max that amount into a specific category. So which means that if you have already quite some money, that might not be enough to cover your desired % of asset allocation of your portfolio.

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That said I’d take home bias for CH with a pinch of salt. Large cap are just multinationals that are headquartered in CH, not sure how well they correlate with the country’s economy (the primary market isn’t Switzerland).

If you’re employed, you also likely have already a significant amount of swiss assets in pillar 2 (often real estate).

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