How are Swiss ETF treated tax wise? I guess one needs a CH ISIN to avoid taxes at fund level. Taxes on investor distributions can presumably be deducted from the tax liability? Do I need to buy these ETF at a Swiss broker or would IB equally work without additional tax implications?
I like CHSPI but many seem to prefer a Swiss asset manager, is there a reason for this?
On can buy it on IB yes. I am not an expert but from my point you canât avoid taxes from dividend wherever ETF location
Yes, make sure the ETF has a CH ISIN. 35% Verrechnungssteuer will be withheld but you will get that back when your tax declaration is processed.
There is no tax advantage with a Swiss broker for Swiss ETFs. IBKR is fine for that as well, at least as long as you donât lend out your shares. I.e., donât enter the âStock Yield Enhancement Programâ and donât use a margin loan to ensure there are no issues getting the Verrechnungssteuer back.
At least for an index ETF, I donât see a reason why this should matter. Iâm not aware of anything speaking against CHSPI.
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 âEBSâ 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 donât see, so the actual spread should be not that bad.
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 stocksâŠ
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
Iâm using SPMCHA, with the logic that I hold many of the large caps already in my (main) VT holdings.
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 shouldnât 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.
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
Ok. So what about buying CHDVD. Then you would get a dividend in CHF?
It doesnât 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.
hmmâŠtrue. 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)?
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 donât 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.
Donât 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
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. Theyâre not a good instrument to match liabilities, theyâre 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 weâre apparently noting here, investing in Swiss small caps isnât 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. Itâs 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.