Because some re Funds distribute (sometimes as well: in part) tax free. For these tax free distributions, there is no need for the ETF to as well distribute them. They could just use the funds to participate increase of funding atvotger RE funds…
I see.
So lets say the Index fund consists of two types of income (A + B)
A = income from indirect investment
B = income from direct investment
Do you mean that ETF is not obligated to distribute (A+B) and can simply distribute A + B* where B* is lower than B. The difference between B and B* can be used to buy units of index fund?
Side note: double check if this ETF let’s you benefit from reduced income/wealth tax compared to direct fund ownership.
(Also not quite sure what’s the point of a fund of fund)
I saw in Ictax that taxable income is lower than actual income. So it seems the composition of SWIIT is mix of direct and indirect ownership. I think it’s approx 45-50% of income which is tax free.
The only advantage of FoF is diversification. This is why index fund is used by Finpension for RE exposure. Within 3a it doesn’t matter if it’s direct or indirect as it’s tax protected.
Although I don’t know for sure -: maybe direct exposure within 3a might be less interesting than indirect because income might get taxed twice (once at fund level and then again at time of withdrawal)
But yeah in taxable account indirect ownership is less attractive.
But it’s already fairly diversified within a single fund (and for RE I sometimes want more control, I’d rather be somewhat correlated with my housing costs)
1 Like
Actually I personally prefer exposure to wider Switzerland versus where I live
But you are right. For taxable account - Maybe it’s enough to have a couple of funds as underlying units are scattered anyways
I used to buy individual RE funds, until I realized that no matter how smart I choose my funds - the performance lagged the broad re fund Indes. Market cap weighting has its charme as there was no risk of choosing the right funds at the wrong price or the wrong funds at the right price…
To further de-complexify things, I don‘t buy ETF but the CS/UBs Index Fonds. Tracking Error is a tad better than the ETF and I only get one distribution but not a gazillion of it (aka only one line per annum in my investment accounting tool)
Is there an index fund available for Retail investors?
Apparently my swiss broker let me buy this
And it seems to outperform slightly SRECHA I currently own a bit
After some research I decided to stick with the index like equities and not buying any single RE fund
For a long-term investment, which of these funds would you choose and why?
1.Edmond de Rothschild Real Estate SICAV-Swiss A-CHF - CH0124238004
2.Realstone - CH0039415010
3.Solvalor 61 - CH0002785456
4.UBS (CH) Property Fund - Direct Residential - CH0026465366
It’s not a straightforward answer because choosing a RE fund is like picking a stock with many variables to consider.
Following variables will matter
Dividend yields
Ratio of Residential/ commercial
Location mix
Premium (Agio)
Default ratio
Vacancy rates
Management performance
Debt ratio
Concentration risk within properties
Taxation -: direct / indirect
For example ERRES is focussed on French side and DRPF is focussed on German side.
2 Likes
OK. just tell me which one will make me the most money over the next years then 
2 Likes
Ask chat GPT.
Normal wisdom will say that index funds would be better than fund picking
But in this case , taxation element also come into play. There is no index fund for Direct RE funds only.
All index funds include all funds (direct & indirect)
1 Like
So could you tell us which RE index fund you have please?
I hold this one:
Had thought it was from CS/UBS, but looks like I hold the one from Swisscanto. There is no Non-Inst one from UBS.
1 Like
…what?
should not be typing when in a rush
There is a Swisscanto Index Fund (see above).
1 Like
What I still don’t understand: what is “non-inst”?
non-institutional investor
2 Likes