CHF 2.1M Portfolio – Looking to Reduce US Tilt, What Would You Do?

Investing / Portfolios
1

Hi everyone, long time reader, first time poster…

I’m 48, unmarried, and have been steadily investing in VT over the past few years. I’m still fully in equities—haven’t felt the need to add bonds yet based on my risk profile and time horizon.

That said, I’m starting to question the heavy US exposure in my portfolio and wondering if I should diversify more internationally. I’d really appreciate your thoughts on what I might be missing or could improve.

Here’s a snapshot of my current portfolio (across IBRK and Degiro):

Asset CHF Value Percentage
2nd Pillar 1,200,000 56.0%
AMZN 40,000 1.9%
AAPL 112,000 5.2%
VWRL 341,519 15.9%
VT 399,410 18.6%
Cash 50,000 2.3%
Total 2,142,929 100%

Questions I’m grappling with:

  • Is my US exposure too high given the global macro outlook?
  • Would it make sense to tilt more toward ex-US or emerging markets?
  • Am I missing any obvious diversification opportunities?
  • Should I start thinking about bonds or other asset classes?

Would love to hear how others in a similar situation are thinking about this. Thanks in advance!

2

Looking only at your equity portfolio , it seems your exposure to US stocks is about 70%

So to answer your question -: yes it’s high. But I think you know that already

The key question is -: if you want to reduce your exposure to US, you need to decide where should you increase your exposure

The challenge you will face is that you will look at historical returns and worry about „what if US continues to over perform the rest of world“ and „what if US have a big crash due to their policies“

My recommendation would be to think about this carefully and make changes for long term. You should be willing to live with the consequences .I see this more of a risk management topic rather than return maximisation.

Have a look at some strategies deployed by wealth management firms in Europe and Switzerland. You might get ideas.

Personally -: I keep my US equity exposure to max 50% of my equity portfolio

4 Likes
3

48 and 1.2 MCHF in the 2nd pillar ? Respect !
Therefore I would say you do not have that much of a US-tilt overall.

8 Likes
4

Thanks! But International civil servant… No AVs/AI anywhere/1st pillar. So that’s all I have. A bit less impressive with that context perhaps.

5

Thanks for the thoughtful response. I agree with my challenge being more of a macro risk management topic.

On the 50%, the easiest way would be to shift my monthly DCA purchase into VXUS (although I think it’s slightly less tax efficient than other options?). I could also sell the AAPL and AMZN. they’ve given me good returns, and I have a lot of exposure to those in VT anyways.

Any tips for publicly available wealth management approaches which are not commission scams?

6

Actually it depends on what your regional allocation plan would be. There are different strategies.

For example if US is 50% and rest of the world is 50% then then adding Ex-US ETFs would be good. My recommendation would be to check out EXUS & XMME instead of VXUS . UCITS ETFs would be better as they wouldn’t be exposed to estate taxes.

However if US should be 50% but Europe weight should be increased then following will be better

80% World ETF + 20% Europe.

If the plan is to overweight Switzerland, then following would be the idea

80% World ETF + 20% Switzerland ETF

—

In addition, you can choose to simply buy new stuff outside of US and don’t sell anything. This will rebalance slowly over time.
Or you can choose to sell stuff to rebalance already

—-

Commercial available wealth management options are a bit more expensive than DIY.

Passive
Vanguard lifestrategy funds can be good idea

Active
I think Alpian is cheapest I have heard for active management. 0.75%. UBS have 0.9 or 1% solutions. There are many more. You need to fish around

Robo advisors
Then we also have robo advisors where price is around 0.4-0.5% ( Finpension Invest, Truewealth, VIAC etc)

7

I may not be the reference investor (too much risk?) but I have 85% of my stock portfolio in the USA. I only trade U.S. markets and I like the easy access to all the data I need and the very cheap trading costs.

Now, most of my big holdings are international companies. U.S. domiciled companies, but they make their money around the whole world. So I’m not concerned at all about country risk.

My actual holdings sorted by country: Finviz

3 Likes
8

We have recently seen how quickly that can shift. The companies are still domiciled in the US and subject to US administration.

1 Like
9

I don’t understand that point. For now U.S. companies seem to adapt quiet well to the situation. Anyhow, if they don’t, non-US domiciled companies do probably even worse.

Tariffs? We have up to 800% tariffs in Switzerland for some agricultural goods without even counting the subsidies. The world would be a much better place without this bullshit, but it isn’t. Note that the government always finds an excuse for tariffs, being Switzerland or the USA.

I invest mainly in the USA because it is cheap, there is a lot to choose from and the information is easy accessible and standardized. But then I don’t invest in ETF and to analyze single stocks is quiet some work. The U.S. markets and the SEC provide free tools to automate some of this work for my mechanical strategies.

1 Like
10

Because Trump TACO’ed. Also there could be more far reaching stuff, like a new wanna-be dictator deciding tech is critcal for the US and making big tech state companies. Super unlikely, but if you are exclusively exposed to one country, you risk losing it all if something unlikely happens.

Come on… You bring this up all the time and get flak for it every time. I’m not gonna repeat again why that is a wholly nonsensical statement in this context.

And Trump wants to cut funding and SEC’s power for example.

All I want to say is that too much concentration in a single country is almost never a sound idea from a risk mitigation standpoint.

7 Likes
11

Thanks much!

Interesting that that Vanguard life strategy funds have a comparable TER to EXUS and XMME. Was not expecting that. Still higher than VXUS though, but I guess withholding tax will dwarf the difference in any event?

But curious as to why I should worry about US estate taxes, as I think I’m well below the exception cutoff assuming I have at least ˜15% of US assets in my estate?

To the Swiss weight: My second pillar is quite CH-heavy, so I’m ok with no additional home bias in equities.

But when you say 80% world ETF + 20% Europe, won’t I eventually also underweight emerging markets? EXUS could give me a more stable path to rebalancing US equities to 50%? Or am I missing something?

12

I still don’t understand what has shifted “short time” against U.S. investments. I get the point of country diversification. Anyhow, did you know that U.S. companies even paid the dividends to German stockholders after world war II?

In my opinion 90% of all countries in the world have a bigger risk to expropriate stockholders than the USA has. Now for the business, if it is international, I see only the risk of tariffs which always do bad for all parties involved.

1 Like
13

Or you want to look into 50% USA + 30% Europe + 20% Emerging Market…?
PS: There is always “something” in everr portfolio…

14

You are right.
Every option will lead to overweighting something and underweighting something else

That’s why it’s important to define when you underweight US, what exactly do you overweight

I think based on your answer, it seems following works best for you

World ETF + EXUS + XMME

There is no withholding tax advantage for VXUS vs IE based ex-US funds. You can also go for VXUS if you prefer that.

-//

Estate taxes is a complicated topic, there is a thread on this forum about it. It has a lot of comments. I recommend you to read it in full.

2 Likes
15

Nothing has shifted. Nothing had changed

It was never a good idea to have 90% of your investments in US companies. Too much concentration risk in one region.

There is nothing wrong in investing in only Swiss companies too. They have outperformed the world since 35 years. But again too much concentration in one region.

I am not referring to where these companies do business. I am referring to law which these companies need to align. Google might be doing business globally but they still need to obey US law

It might be okay for you. But regional diversification is often recommended . That’s all

3 Likes
16

Exactly! You are subject to the jurisdiction in which the company is registered. It’s similar to the issue of how the trading currency of an ETF doesn’t matter, which people often fail to understand at first. The same goes for regional diversification.

17

Still not convinced. Google does not only need to obey US law, they need to obey all the laws in all the countries they do business. As do the other companies.

My personal situation is a bit different. Due to real estate half of my assets are in Europe and the rest I keep investing in the USA.

As I said before, 90% of the countries in the world do have a bigger chance to expropriate stockholders than the USA does. To diversify away the rest is simply not worth the effort.

1 Like
18

That’s not my understanding.
Apparently US govt has forced all tech companies to share data when required. This means European data is at mercy of US govt.

19

This I can agree.
It’s a personal choice.

20

Thanks. Looking more closely, I’m surprised by a seemingly very small overlap in holdings between EXUS and XMME. Interesting. Thanks for making me realize that.

Estate: Thanks. I need a script and a dead man pedal to sell all that when I’m still warmish.