I would say the distinction between “CSIF” and “UBS funds” is non-existent now. And yes, former “CSIF Europe ex EMU ex CH” became “UBS” without any announcement few months ago.
But this is not the point of the paragraph, by the way.
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Most CSIF funds are renamed to UBS already. I think even the bond funds.
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Is my understanding correct that CSIF funds, such as “CSIF (CH) III Equity US Blue - Pension Fund ZB”, remain unchanged post-UBS acquisition? I.e., anyone who was previously invested in this fund via finpension still remains invested and can continue to invest, at least until otherwise notified by finpension? Although the fund remains listed on their website, I notice that there’s no longer a link to the corresponding factsheet. But my assumption is that it’s still active/investable, although for that reason I struggle to understand some of the comments in this thread… has UBS announced plans to modify/discontinue?
Correct, everything stays as before.
The only thing which changed is the UBS Management Fund team, who is responsible now.
I am looking at changing my strategy in VIAC. I have UBS funds for SMI and SPI Extra set to the max allowed (i.e., 20 and 35% respectively). The rest is in “UBS World ex CH - Pension Fund”. I did this a couple years ago after reading somewhere here in the forum that CHF/USD conversions would be best avoided and thus I tried to have most of my CH-bias concentrated in VIAC (which maybe an overkill optimisation).
Gemini has a completely different opinion, i.e., it suggests I do the opposite and put all CH funds in a taxable account and maximise US/global stocks in 3a because there I would pay 0% tax on dividends:
The “Tax Efficiency Counter-Point” is a strategy for Swiss investors to maximize the limited “tax-free” space of a Pillar 3a account by prioritizing assets that suffer the most from “tax leakage” in a regular taxable account.
Here is a breakdown of why this usually leads to holding fewer Swiss stocks in 3a and more global/US stocks instead.
1. The “Pension Fund” Advantage (0% vs 15% WHT)
The most important technical reason is that 3a providers like VIAC or finpension use specialized “Pension Fund” (PF) share classes for their funds.
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In 3a (PF Funds): These funds are recognized by the US IRS as qualified pension vehicles. Under the US-Swiss tax treaty, they are exempt from US withholding tax. They receive 100% of US dividends (0% leakage).
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In Taxable Accounts: Even with a DA-1 form and a W-8BEN, a private investor typically still “loses” 15% of the dividend at the source. While you can claim this back against your Swiss taxes (see below), there is a catch.
2. The Income Tax Trap (Why DA-1 isn’t a “Full” Fix)
You mentioned that you can get back the 15% US withholding tax via the DA-1 form. While true, this only solves the double taxation, not the tax itself.
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Taxable Account: If you receive a $100 dividend, the US takes $15. You declare $100 in your Swiss tax return. The Swiss tax office sees you owe, say, $30 in income tax (30% marginal rate). They then subtract the $15 you already paid to the US, so you pay $15 to Switzerland. Total tax paid: $30.
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3a Account: That same $100 dividend arrives with $0 taken by the US. Because it is in a 3a account, it is not taxed as income at all. Total tax paid: $0.
The Conclusion: US dividends are “cheaper” to own in 3a. Since your 3a space is limited (CHF 7,056/year), you should fill it with the assets that save you the most tax. Swiss stocks are easy to handle in a taxable account (35% is fully refunded, and you’d pay the same income tax anyway), so they don’t “deserve” the precious 3a space as much as US stocks do.
WDYT?
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This doesn’t make sense. Assuming a full DA-1 credit, you pay exactly the same percentage of dividends in total taxes for US and CH stocks. For US stocks, 15% will end up with the US government and you may prefer CH stocks because all of your taxes stay in Switzerland, however, from a pure investor perspective, there is no benefit either way.
As CH stocks tend to distribute more dividends than US stocks, CH stocks are typically better in 3a (as there are more tax-free dividends).
Things are different if you use UCITS ETFs without DA-1 to invest in US stocks, or if you can’t get a full DA-1 credit. Or if your priority is to minimize the amount of taxes the US government gets from you.
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It’s really stubborn, after many message back and forth this is the best I got
“You are right that if you use VT and if you successfully file the DA-1, the math is very close.
However, the general advice to have less Swiss stocks in 3a exists because the 3a account is the only place where you can get the 0% US rate. By “wasting” 3a space on Swiss stocks (which are easy to handle in taxable), you are essentially leaving your “Superpower” on the shelf. If you have any other foreign assets that aren’t as “clean” as VT (like emerging markets or Europe), the 3a account is much better at protecting them than a taxable account.”
The higher the dividend yield, the better it is tax-shielded in a 3A account than in a taxable account. End of story.
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And CHSPI has higher dividend than VT, hence Gemini debunked?
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As indicated, Gemini is talking out of its cybernetic ass.
This is true. It is also true of Swiss dividends.
This is true also of US stocks.
This is true. Hence:
.
And this:
Is bullshit.
LLMs are good at making sentences that look coherent. I wouldn’t trust them for financial analyses. They can make farts that smell like perfume, but they are still farts.
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I‘m following this discussion with a very high interest. Assuming you are following a 80/20 VT/CHSPI strategy, the conclusion therefore is to treat your 3a as normal part of your asset allocation and max out your 3a with a CHSPI equivalent.
Also agree that Gemini is wrong.
High CH divs should go in 3a.
This is also a questionable statement for the following additional reason - for the dividend to be “protected” the Index Fund used must be a “Pension Fund”, “IPF” or “PF”, i e. in the fund name they have:
Swisscanto = IPF Institutional Pension Fund
UBS / ex-CS = Pension
But these Index Funds are only available for USA & Japan. Ok, also there’s also the “World” IPF Index Fund, but probably it means the USA and Japan bits in the “World” fund are protected.
So, can you protect your dividends from EM and Europe with a IPF Index Fund? It doesn’t exist, I don’t think so, but happy to be proven wrong.
Actually, I would like to ask into the expert circle - can I “optimise” my Europe and EM dividends by holding the Europe and EM funds in my 3a instead of in taxable?
Dividend yield of Europe and EM can be quite high, and withholding taxes on Europe stuff especially can be high.
And if yes, with which funds?
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If you
- have an average or lower income, or
- a high mortgage, or
- don’t want to use US ETFs,
putting regions that are WHT-exempt (US, Japan, also Canada I believe) in 3a into that makes sense.
However, I believe the availability (or lack thereof) of specific funds is much more important than saving 0.2% or so. If you want to use Quality or Momentum factors, or dividend funds or whatever, they’re often not available in both baskets anyway, so the decision is made for you.
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Yes. It takes energy for me to remind myself how unreliable LLMs are and it’s tempting to just ask them stuff and take their answer for good. I knew something was off this time and therefore asked the forum (thanks!).
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Sorry, but I don‘t understand your reasoning behind this.
The conditions are those that can trigger not having a full da-1 refund (and leaking part of the us withholding)
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It’s not leaking per se, but rather there are too many other deductions, so there is no tax left to reduce by reclaiming WHT.
I know @Dr.PI is following the same strategy as maximising US assets into 3a.
I am myself replicating Wold allocation with the same etf “UBS World ex CH - Pension Fund”.
I find cumbersome to recalculate your US and ex-US exposure to match MSCI ACWI in IBKR+Viac.
Can someone share an easy rebalancing strategy ?
I just have a mix of assets in 3a. I hope re-balancing/shannon’s demon will help over the long term.
Yeah I called it leaking in the sense it is avoidable and that you ended up paying more overall than just the swiss tax rate. Synthetic ETF/pension sheltered funds avoid that.