Choice of mutual funds on Interactive Brokers


#1

I am an (unhappy) Swissquote customer since many years and so, every now and then I check for better alternatives that would work for me. I only invest in mutual funds (and occasionally in ETFs).

A year or two ago I looked at Interactive Brockers (which apparently are the cheapest option around), and today I did another check. My problem with IB: they don’t offer almost any of the mutual funds that I hold in my portfolio. To be precise, IB only offer 2 out of 8 (by comparison Swissquote has 6 out of 8). Postfinance (which apparently uses Swissquote platform with somewhat different pricing and range of available products) offers 5 out of 8 and but is a little cheaper than Swissquote.

I would be grateful for any suggestions with respect to finding a broker that has better choice and lower cost than Swissquote or Postfinance when it comes to mutual funds.


#2

Well, there’s your problem. Why not just buy ETFs and stop hurting yourself for no reason

Most of MFs that IB offers are for US residents only


#3

I’d be interested to know which mutual funds you invest in and why.


#4

I just find that in segments I want to invest in there are sometimes mutual funds that consistently outperform their indexes. So why settle for less? 1-2% outperformance per year easily covers any extra fees. In other situations, I don’t find a suitable ETF that replicates the index I want to invest in, e.g. Swedish Small Cap.


#5

I just find that in segments I want to invest in there are sometimes mutual funds that consistently outperform their indexes

Which funds? Active? If passive you should really understand the source of this alpha rather than just naively pretend like it materialized out of thin air. Maybe these are just your dividends as indexes are usually price indexes not total return

I don’t find a suitable ETF that replicates the index I want to invest in, e.g. Swedish Small Cap.

This is one of first google hits for that phrase http://en.xact.se/Our-ETFs/Equity/XACT-Swedish-Small-Cap/


#6

Mutual funds in my portfolio are active. With respect to the Swedish ETF - it is only around for a couple of year, it is apparently the only one available and it underperforms the active fund I hold by 3%+ over 3, 5 or 10 year periods.

But if you check my original post, I am not actually asking for an investment advice. Everyone is entitled to his opinion about where and how to invest. I have done my research (and continue doing it) and decided against ETFs in most cases.


#7

If you don’t care about the fees associated with mutual funds, why do you care about broker fees then? The latter are probably negligable compared to the mutual fund fees.

Look, IB is a low fee trading platform for very active traders. IB is actually not a very good platform for “low maintenance” trading because it is complex and provides little guardrails to keep you from shooting yourself in the foot.

Mustachians are not the core demographic for IB. We just use it for the low fees.

Neither are people who invest in mutual funds. These type of investments you usually do with your local bank


#8

I care both about performance of the mutual funds (which is anyway measured after fees) and about the costs of buying, holding and selling those funds. In fact, the cheapest option is usually to buy them directly from the fund manager, without using any intermediary platforms like Swissquote or IB. The disadvantage is the complexity of dealing with many fund managers, lack of consolidated view and sometimes slower transaction times. Also, some good funds are not available to buy in this way.


#9

IB is a great platform for everything traded on exchanges

Off exchange transactions is really a problem between you and fund managers who are stuck in last century and unwilling to move on with the times into ETF era (perhaps sometimes intentionally to prevent the clients from easily taking the money out). Just add these trading/holding costs mentally to the costs of their funds, it’s just the cost of doing business with them the old fashioned way on which they insist

Also if you’re sophisticated enough to pick exotic stuff like ‘Swedish Small Cap’ for your portfolio, you might as well go picking the underlying stocks instead. These would be on-exchange transactions of course which you can execute cheaply through IB


#10

“Off exchange transactions is really a problem between you and fund managers who are stuck in last century and unwilling to move on with the times into ETF era (perhaps sometimes intentionally to prevent the clients from easily taking the money out). Just add these trading/holding costs mentally to the costs of their funds, it’s just the cost of doing business with them the old fashioned way on which they insist”

I would agree with that statement, but don’t think ETFs solve the problem.

Regarding picking the stocks myself: I have no time or interest in tracking hundreds of shares that trade on many different markets,


#11

I would agree with that statement, but don’t think ETFs solve the problem.

ETFs allow you to buy into the fund via any broker that’s connected to an exchange where it’s quoted, rather than via bank/broker connected somehow to that fund manager

Regarding picking the stocks myself: I have no time or interest in tracking hundreds of shares that trade on many different markets,

But you have time to research and track many fund managers investing in niche things instead?