CHF Money market funds [2023]

Isn’t that up-to 5%? (it will heavily depend on your bank/broker, with Swiss ones being fairly expensive so that it likely doesn’t make sense for short term holding).

1 Like

Wow, this is wild. Why doesn’t the national bank give us access to something like T-Bills in the US? At least Swiss residents should be allowed to access them directly, imo.

1 Like

On a second glance, yes. And there is also some stipulation in their KID about up to 500 CHF entry fee if you exit after 1 year (I don’t get what that’s supposed to mean).

It seems cost isn’t transparent. I didn’t find the actual rates and I can’t read their annual report well enough to calculate it. Not understanding a product is a good reason to keep your hands of.

The annual report in 2022, if someone wants to try:

1 Like

Thank you so so much for the reply. Regarding this paragraph particularly, I am still quite confused. If the performance 0.2% for four months continues in the rest of the year, the whole year performance is gonna be like 0.6%. This is still very far from number of YTM, like 1.5% - 1.9%. So apparently there is some basic fix-income knowledge I don’t get.

Seeing YTD performance 0.6% and YTM 1.5%, If I invest 100k and expect to exit after a year, should I expect 101.5k or 100.6k? I know in a savings account, I can expect 101.5k. Essentially I am looking for a savings account alternative, hopefully getting similar rates locked for as long as possible (1 year) by doing it myself. Is the thought too naive?

Really depends where I think. On IB it seems to be around 5 CHF flat fee for many funds.

1 Like

What I don’t get is how a fund-side entry fee can be dependent on the broker. If my money reaches the mutual fund, they need to buy more securities, regardless where it came from. Or is there some broker-side pooling and netting going on?

1 Like

Because this is how the fund finances the kickback (I mean “retrocession”) to the broker… still legal in CH, less common than before.

3 Likes

Quick, kill it with fire.

Is there any way to calculate the non-kickback rate? Are there jurisdictions where this kind of kickback is illegal?

All in all it seems mutual funds are highly inferior to ETFs.

1 Like

Go to a broker and get a quote for the units both to buy and sell some, and look at the spread… ultimately that is what matters to you.

At the moment, I just want to know if it’s possible to do so, satisfying my curiosity. Learning some instruments. If the answer is yes, I will then start thinking about when and why and why not to do it

Thank you for the reply. I guess the money market fund is not a good alternative to savings account then? I thought the money market fund generates similar yield to a saving account, trading locked interest for a fixed period to flexibility. Is that wrong?

That’s roughly correct, but the market isn’t as mature as e.g. the US, so don’t expect the same.

(and fees on mutual fund in Switzerland tend to be somewhat high, which could eat a lot of the benefit of the extra liquidity).

1 Like

I am not even thinking about fees yet. Just the performance, should I be happy about the one with YTD performance of 0.2%? It’s the best one I found in the list. Or maybe this is a very bad metrics for money market fund as the policy rates are changing? Should I look at annualized last month return? last week return? Is YTM a good metrics evaluating the money market fund?

1 Like

I think the standard is the 30-days (net) yield, but that’s standard for US funds. Some european funds show something similar.

FYI I’ve ended up using the Pictet LU short term MMF. Mostly because of if its size (billions).

I think it currently yields >1% net of fees while being liquid (can get access to money in a few days). Tho compared to fixed term deposit accounts and similar, this isn’t insured.

1 Like

In which broker did you buy it? IBKR? What were the total fees you paid (e.g. bought 10,000 CHF , paid 7 CHF fee).

Paid the flat 4.95 IBKR fee: Mutual Funds Outside the US | Interactive Brokers LLC

It did show up as a loss on the position. (E.g. bought XXk, position showed XXk, with unrealized loss of 4.95)

It’s a fund, so it is not insured but regulated and, unlike bank accounts and short/medium term notes, the fund’s assets must be segregated from the managing company’s funds. I mean, I don’t think it is more “risky” than a savings account, the “insurance” is just done differently.

Yes, I wouldn’t be worried about the fund company itself. The issue is if the fund puts the assets in a bank or other company that blows up overnight (CS style).

(It’s really not supposed to happen, at least for the reputable ones, they’d only store the money in good assets with a lot of diversification, e.g. looking at a snapshot for the pictet MMF, the top holding is 2.6% of Japan T-Bill, but then there’s going to be counterparty risk of the CHF hedging, etc.)

But then 2008 tells us things can go badly for MMFs (there’s been more regulation since then, both in US and EU side).

Yes, and that’s what prevents me from seriously thinking about investing in MMF. It supposed to be safe and low yield, but may suddenly turn out to be risky and negative yield.