Well, I was a bit dramatic there. I’d like to state that I don’t see myself as a victim.
It was a compromise between me, my wife and the time we were able and willing to invest.
Also a lack of experience as first time home buyers made us take certain shortcuts that proved shortsighted.
With hindsight:
To do a full cost analysis of a mortgage offer, you need to take into account the funds you will be able to invest in for amortization. If they’re expensive bank funds, as they are in the case of UBS, the opportunity cost can be massive over an amortization period of 15 years.
In the case of UBS, my back of the envelope calculations between the Quality Fund at Finpension and the UBS Vitainvest World 100 Passive suggest a performance difference of 1.5-2% a year. With the Active 100 World, it would be around 3 %.
With a 3a capital that currently stands at more than 60’000 CHF, that’s an implied cost of currently around 1000 CHF per year which only increases over time. Plus the lost future returns.
I will call our UBS account manager to request a reduction of the amortization requirement and to see if there is anything else we can do.
Can you help me understand the breakdown for this difference?
TER %
Other factors
I think you are overestimating the returns of Quality fund. The TER% of UBS passive fund is higher. I think net-net UBS is 0.5% more expensive than Finpension. But where is the rest coming from?
Active fund is not really relevant because you would normally use passive.
I’m in the process of setting up 3a account at Finpension. Also want to change my current vested benefits account strategy (all CS funds). Are the Swisscanto funds the best option?
The following comparison is based on the fund performance, not portfolio.
Fund Finpension: CSIF (CH) III Equity World ex CH Blue (CH0429081620)
Fund UBS: Vitainvest Passive 100 Sustainable Q (CH1110134157)
I am chosing these 2 funds because I’m invested in them, not for any other reason.
1. TER is lower
CSIF (CH) III Equity World ex CH Blue: 0.0038 %
Vitainvest Passive 100 Sustainable Q: 0.25 %
2. Allocation is different Vitainvest 100 is more conservative: Lots of Switzerland, less tech, hedged for CHF.
It is heavy on ESG which limits the choice of shares (for better or worse).
As far as I could glean from the factsheet, no benchmark is given.
3. Performance
So, I can’t be bothered to get a correct Total Return because UBS is distributing and Finpension is accumulating. So I looked up the dividends and made a guesstimate.
Dividends for Vitainvest Passive 100 were
2022: 0.32 CHF
2023: 0.72 CHF
2024: 1.25 CHF.
It increases total returns by a bit more than 2 %.
In any case, the graphs for a hypothetical investment on July 6, 2021 (launch date of Vitainvest Passive 100 fund) look like this:
Adding the fee difference of 0.26 % difference in fees,
the opportunity cost of holding the UBS fund is 2.2 % + 0.26 % = 2.46 % (approx.)
Some musings and caveats:
I was surprised by this big difference. It’s not why I picked this example. A typical 3a solution is more diversified and would make for a smaller difference between portfolio performance.
Past returns ≠ future returns
3 years and 3 months is not a long time for a comparison.
The recent rally has basically shown the huge difference the asset alllocations makes. The FP fund’s exposure to Tech/US has tipped the scale massively.
Given the more conservative setup of Vitainvest 100 Passive, a significant difference in performance is likely to persist. Maybe not to the tune of 2 %, but 1-1.5 certainly, and more so after the fees.
Thanks for sharing
I think in principle having flexibility to invest is always better . So I would also prefer Finpension or Viac.
And obviously custody fees would also be lower
The point I am trying to make it that if you do get a better mortgage because of your 3a, then this difference might get compensated
Regarding past performance of US or Tech vs . Switzerland, that’s not a guarantee for future. Right?
I’d be interested in getting my 3a closer to VT (right now, I have Global 100 in Viac with its heavy Swiss bias meaning 40%) as simply as possible.
From the 1h I just spent reading the forum to get up-to-date info regarding the best 3a, given the comments above about FP and whether it’s better than Viac, it seems that:
there might be some differences in mortgage / insurance possibilities
Regarding strategies:
it’s possible to invest in a single “Quality” ETF via FP which one could consider reasonably close to VT, but fundamentally it’s still different
it’s possible to customize the allocations in Viac and FP but then you need to rebalance that from time to time if you want to approximate VT this way
If I rule out 3. for some reason (see the debate in the thread linked above, I don’t want to rehash that here), then it seems that 4. should be my favored approach? And given 1. and that I don’t care about 2. (at least for now), FP or Viac should be the same for me? Does that make sense? Is there an ETF available in FP 3a that’s closer to VT?
Short answer is there is not much difference except for currency conversion (and insurance + mortgage possibilities)
There is no single fund to get VT on either.
You have to do MSCI world ex CH + CH + EM to come close to VT. maybe consider MSCI world small cap too.
The major difference between VIAC and Finpension is that FP has CHf denominated funds while VIAC has USD denominated funds ( same underlying funds) . So there will be currency conversion when buying selling and a bit at rebalancing in VIAC.
I’m planning on doing a deep dive into fund comparison as soon as time permits, including TER, tracking error and spreads. But all funds offered by Finpension should generally be ok (at least passive MSCI indexes, unhedged non-ESG) except for EM, there I’d avoid this one:
It shouldn’t matter much. The performances are about the same, although the benchmark varies, probably because some fund houses don’t include the returned WHT from US/JP in the benchmark values, even though they receive the WHT.
I would choose UBS. They have the best spread and explicitly state that they get WHT back from US and JP.
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