Great, thanks a lot!
On which exchange do you purchase Swiss ETF on IB usually? I checked today and it showed me a quote for “EBS” which seemed to have quite a big bid/ ask spread for CHSPI. Am I missing something or is this normal?
This is SIX. CHSPI is not traded anywhere else.
And, there could be also tons of hidden orders that you don’t see, so the actual spread should be not that bad.
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Thanks a lot, do you use any Algo to purchase CH ETF on IB or instead place the order between the mid and ask shown on screen? For VT I usually used the IB mid price Algo but that does not seem available for non-US stocks…
I personnaly use recurring investment on CHDVD
Have you considered SLICHA? it is somehwere between the ones you mentioned.
It consists of 30 holdings and the top 10 account for 61% (the top 4 are all capped at 9%, the rest at 4.5%)
ETF: https://api.fundinfo.com/document/cdbfe92955aad29109ef71015501c51b_124612/MR_CH_en_CH0032912732_YES_2023-11-30.pdf
Index: https://www.six-group.com/en/products-services/the-swiss-stock-exchange/market-data/indices/equity-indices/sli.html
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I’m using SPMCHA, with the logic that I hold many of the large caps already in my (main) VT holdings.
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I want to add a Swiss ETF to my portfolio because I dont like how exposed I am to the dollar. Which ETF (I buy with IBKR) would you suggest / Do you have in your portfolio?
I have looked at different options e.g.: CH0032912732. However for this one I dont get any market data when I want to trade it with IBKR. Anyone has an idea why?
Yeah if you want to avoid USD exposure, you shouldn’t get any of the global swiss companies who are making their revenue abroad (banks, pharma, etc.). Those are most of the swiss stock market, cap weighted.
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Similar to what was mentioned here - and unless I missed something that someone else on the forum can correct me on - buying this ETF would actually increase your exposure to the USD and Euro
Most of the constituent companies have more expenses in CHF than they have revenues. If USD declines then revenues in CHF terms will decline by more than expenses
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Ok. So what about buying CHDVD. Then you would get a dividend in CHF?
It doesn’t change things if the income streams and/or liabilities of the companies paying you that dividend are not in CHF: the value of their assets would go down by the value of the dividends distributed, reducing the value of the company (and its stock) by that much.
The company still needs to generate the revenue that allows it to afford the dividend payouts, dividends should decrease (or the liabilities of the company increase) if revenues tied to other currencies become lesser because of a strengthening of the Swiss franc.
hmm…true. This changes the topic now, but what can you do against the exposure to the dollar (other than moving to a country where you pay with USD)?
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No difference. Based on a very quick review of the factsheet the companies in CHDVD (ishares Swiss Dividend ETF) appear to all have more expenses in CHF than they do revenues.
The cost of converting a USD dividend to CHF in Interactive Brokers is ~0 so I don’t see much meaningful benefit of having the dividend paid in CHF either
The fact is Switzerland has a balance of trade surplus because it has a lot of very successful companies exporting more goods and services than we import.
The only way I see to reduce exposure to foreign currency would be to avoid companies with exports. But then you miss out on the aforementioned, successful companies.
Instead focus on buying good companies regardless where they are listed and let your wealth in CHF take care of itself. e.g. buy VT or an MSCI World Tracker.
Don’t let yourself be distracted by share price growth rates quoted in USD in the news. USD has depreciated by ~2% p.a. against the CHF for decades and is likely to continue to do so
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My answer would be bonds (or cash), hedged in CHF if denominated in another currency.
Stocks of big international companies should be mostly currency agnostic, that is, they are exposed to a wide array of currencies and you reap whatever profits (or losses) you get in your own currency. They’re not a good instrument to match liabilities, they’re an instrument to generate profits reflecting the prospects of the real investable economy (on the long term, with very erratic shorter term behavior).
Small caps may be more exposed to local markets but as we’re apparently noting here, investing in Swiss small caps isn’t that easy for private investors (our best bet, at the exception of individual stock picking, would be the SPI Extra through a 3a/vested benefits account, by my very amateur assessment).
I will use a combination of 10% SPMCHA, as there are at least some companies in there which operate mainly in Switzerland and 10% of ACWIS a msci acwi etf by UBS hedged to CHF. It’s also a synthetic etf, which should get around the US withholdimng taxes on dividends.
Rest is basically a world portfolio, as in something similar to VT. There is some evidence suggesting partial hedging is worth it.
80% VT 10% SPMCHA 10% ACWIS, maybe even a little more would make sense.
Like 15/15% or 10/15%. You get another layer of diversification with that. At least in my opinion and got that from the impression of the stuff I read about.
Unfortunately there is no swiss small cap etf or Spi extra etf, otherwise I would probabaly go 10% SPMCHA 10% swiss small caps or 20% SPI extra.
A kind of All-Swiss ex SLI would be great to have.
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I went with CHSPI (2/3) and SMMCHA (1/3). Don’t like CHDVD, since tax wise it’s not interesting to maximize dividends in Switzerland. Would I start today, I’d probably go only for SLICHA, despite the higher fees, because the Big 3 are capped at 9%.
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Late to the party. CHDVD is indeed taxed more, but in a year it made 5% more.
It might be a good idea to start buying it just before FIRE to get some cash at hand.
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Indeed you should expect a higher profitability of high-dividend stocks.
Dividend investors will tell you that theory does not extend to reality, and that dividend stocks do indeed do better than the market. I’m not denying that. On average, dividend growth stocks beat the market. But dividends are not the reason. Dividend growth stocks, on average, have excess exposure to the value, profitability and investment factors. That is what explains performance differences. This does not make picking individual dividend stocks a good idea.
(There is no free lunch, the “factors” mentioned are risk factors.)
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