Choosing an ETF on Swiss stocks

In order to do put some home-bias in my portfolio, I had started buying CHDVD. The reasoning behind that is that as I already own the big swiss companies in VWRL I wanted an ETF allowing me to cover other stocks.
At the same time I don’t feel too comfortable with regards to SMIM both for the higher TER and volatility. I’m not sure it makes sense to have >10% of my portfolio in Mid-Cap Swiss companies.

I then realized that of course having dividend oriented ETFs is tax inefficient so I began reconsidering my decision. Looking for the most liquid, lowest TER, diversified ETFs basically left me with CHSPI. Now, I know it still contains the big companies, but it is (?) better diversified than SLI.
I was ready to move my allocation to CHSPI when I realized, looking at the performance charts on JustETF that - if we exclude dividends - CHDVD and CHSPI have basically the same performance.
Am I missing something here? If this is true it would just make sense to keep CHDVD and pay taxes on higher dividends that I wouldn’t get with CHSPI, right?

I would obviously appreciate any other ETF/general suggestion that I didn’t take into account for my home bias (and I know I should include my 3a pillar in it but it’s not enough right now).

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CHDVD has Novartis (16.24%) and Roche (15.74%) as main holding. As long as Nestlé doesn’t differ too much from those two, CHDVD and CHSPI will have the same performance.

Buy CHSPI. It is more diversified and has a lower TER. Taxes probably makes a difference too, but remember some dividends are tax-free anyway. If you pay more than 20% taxes it should make a difference I guess.

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What would those be?

The companies sometimes use the agios from capital increase to give tax-free dividends. CHSPI and CHDVD put all of them in one of the fund dividend each year. The biggest CHDVD holdings doesn’t look like they did that in 2019 so the fund only distributed 0.06 CHF tax-free in 2019.

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My point, regarding performance, is that the capital gains, from 2014 to now would have been almost the same. CHDVD is now at +17%, and reached a max of +45%, while CHSPI is now at +21% and reached a max of +41%.

This plot only includes the value of the ETFs.
But if we look at their return after reinvesting their dividends at every payment you can see that over the same time span they both reached +41% but CHDVD made it to a max of +71% against +63% for CHSPI

What I simply find surprising is that the capital gain would have been the same, so even including taxes on dividends (which are probably not taken into account in the justetf plots), having a higher dividend would make CHDVD more profitable than CHSPI no matter the taxation!

No, because to have the same +41% performance you had reinvested ALL your dividends.

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LafargeHolcim, for example.

They also have a scrip dividend, consisting of discounted shares.

What about traditional index funds instead of ETF?

Credit Suisse has some that are cheap and accumulating.

Also, since SMI consists mostly of NESN, NOVN and ROG, you could buy an index fund on SMI or SPI and then overweigh mid and small caps using another index fund on SPI Extra?

I personally started investing in CHDVD, but I would invest in CHSPI. In Switzerland, there is no point chasing dividends. And CHSPI is slightly more diversified.

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does anyone has ever considered investing in swiss stocks via the Franklin FTSE Switzerland ETF?
I encountered it in Tyler’s amazing site as a possible investment for large cap blend Swiss stocks:

The evident advantage is the super low TER (0.09% vs the competing ETFs 0.25%), disadvantages: it’s US domiciliated. Since for me the swiss US investments taxation is still too messy to calculate, I can not evaluate if the -0.16% in TER compensate eventual loss due to US domicile. Can any of you do it?

CHSPI is 0.1% TER. Non-swiss domiciled funds pay non-refundable 35% withholding tax on dividends paid by swiss securities. And those are over 2% I think.

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Or you can buy SMI or SLI futures and make your own synthetic fund with TER of -0.75%.

And the last general point: your pension Fund is investing in Swiss stocks for you.

As to @Dr.PI suggestion; go for CHSPI. Next to TER, AUM of CHSPI is a lot better ( 2.2B vs 54M USD)

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I 've read a lot of negative comments about CHDVD, which is not optimal in terms of tax. I’d like to add a little nuance here. When we look at it more closer, the total return is higher than the other 2 etfs, and I wonder if it can cover the difference in dividend tax. Indeed, according to the product page on IB: Over 5 years 9.47% per year on average and 8.19% since the inception of the etf in 2014. CHSPI over 5 years averages 6.38% and 6.69% since inception. SMICHA over 5 years is 7.07% and 6.87% since its creation. The dividend yield are CHDVD: 3.63% CHSPI: 2.77% SMICHA: 2.85 which is not a huge difference either. I know, however, that the history is not long enough to have a better analysis, but I think it should be given more consideration. What do you think ?

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Pure coincidence.

In a more constructive manner: all underlying indices go at least 16 years back, so feel free to benchmark yourself.

Thank you for the link but it confirm my thinking. Total return over 15 year SPI SELECT 20 SDIVIC 8.53% vs 6.31 for SPI total return

I’m not sure it’s pure coincidence: one of the appeals of big Swiss companies’ stocks are dividends (for all the reasons, deluded or rational, you can imagine: investors and the market are not always rational) so it’s possible that big Swiss companies with a steady and growing stream of dividends have attracted more foreign capital than other Swiss companies.

My main grief with this fund (and the SPI® Select Dividend 20 Index) is that it is very concentrated. It holds the stocks of only 20 companies and the top 4 represent 58% of the total holdings.

I would not invest in it if I was, for any reason, not considering investing in a fund tracking the SMI: to my amateur understanding, they share much of the same risks.


I agree for the concentrated point but it’s also the case with the CHSPI. I don’t find a better CHF ETF with better return and less concentred expect maybe a SP500 hedged CHF ETF.

CHSPI has 209 holdings, the top 3 holdings represent 44% of the total holdings (top 4 at 48% for comparison), then the other holdings are at a less than 5% weighting each. It is more diversified. Not perfectly diversified, but more (in a siginificant enough way for me, but that is a personal assessment).

Edit: on a side note, I am not particularly hot either for investing in an SPI tracking fund. I’m practicing stock picking/pseudo self-indexing for Swiss stocks outside of a global index (because if I am going to take the concentration risk, I might as well save on the TER). If I had to choose an index for Swiss stocks, I’d go with SMIM or other mid-small cap index.

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