There are many others
So what is it now?
I invested in the ubs direct residential since beginning of this year.
As we rent our primary residence, i see it as a hedge against rising real estate prices and rents in the Zürich Metropolitan area.
As i understand the fund does not count towards wealth tax and the distributions are not taxable income for the shareholders, as this is already paid on fund level.
How is this reflected (technically) in the personal tax declaration?
Do i have to list it in the securities section as an asset and list the distribution? Or do you not need to mention the fund at all?
Does anyone know ?
You list it using the values from ictax or letting the website/tax software take care of it
I saw on the fact sheet that there is also following costs
- 0.77% TER
- 5% Entry cost (max). Most likely on Swissquote it is sold at lower price but i do not see this fund under 9 CHF flat fee section.
- 2% exit cost (this looks a bit high) not sure if this is applicable always
So since you own it already, what are your expectations ?
- Approx 2-2.2% annual distribution (tax free)
- no wealth tax on the amount invested in the fund
- overall return (annual distribution + capital appreciation) in line with Swiss residential real estate market
Right?
I am just trying to capture the benefits because I find this UBS fund quite interesting option vs Buy-To-Let
And are there other costs to own this fund?
For example - is it available on IBKR or Swissquote? I don’t want to pay extra custody fees from UBS custody
I think this premium is going to be similar to privately owned real estate. The NAV might not reflect the market value
Clearly you are very knowledgeable on this topic.
I have to be honest that I looked into some of the real estate funds couple of years back and I was disheartened by the fact that their trading price was much higher than their reported NAV. I was looking into it as I look at Stock Funds where trading price and NAV are very close. So I thought Swiss people are overpaying for these funds just to have real estate exposure.
Now that I read your comments, it seems like that comparison of Fund price vs NAV price is not a right thing to do. And I was completely wrong in my assumptions.
So just to be sure if I get it. The difference in Fund price vs NAV is similar to the difference of buying an apartment in Zurich and reporting same apartment in the tax return. They might not match because tax value is always lower. Right?
Fund recommendations
You also recommended people should have 10-15% exposure to such funds. Do you know which ones are the cheapest option vs UBS? Or UBS is already the best when compared like to like?
Last question
TER of these funds should be compared to cost of managing a buy to let property? Or the cost of managing the property is inside the fund and TER is only about managing the fund itself….
To explain, when someone owns a property, they spend money on hiring an agency to manage it. There are also costs of maintenance etc. Are such costs part of TER?
By the way. You original question was focussed on UBS direct fund vs Buy to let (with mortgage)
But in principle , UBS fund is also buying to let (with mortgage) as this thread confirms. They just do it a bit better due to scale.
However UBS also have an article saying that buy to let is not very attractive in current interest environment. So I am wondering if individual buy to let is not attractive then why collective buy to let (via UBS) would be attractive ?
See below article hereArticle
What is your view about this?
Actually I see it is also on IBKR. Ticker DRPF
By the way, what exactly is it? A mutual fund or an ETF or something else ?
I thought it was a fund as the name suggests. But cannot see this fund in fund list of SQ.
I think its a fund for institutional investors.
However the shares are listed on SIX, hence you can buy them as retail as well.
So its a ETF in the true sense of the word
In principle, both are buy-to-let. I totally agree. Therefore if buy-to-let, as a broad term, is not attractive, then both are not attractive.
But for me, buy-to-let, as a broad term, is attractive. What I am comparing is on a more on detailed level, under the same broad term, buy-to-let. One choice costs more time than the other. Once choice has less leverage than the other. One choice is more liquid than the other. One choice has more return than the other, or not?
Got it.
So this entry (5%) and exit (2%) only applies to fund.
And for ETF - it’s basically the same fees as buying a stock.
On IBKR -: it should be 5 CHF then
On SQ -: it should be 0.075% stamp duty + trading fees depending on the amount + exchange fees
Right?
That’s true.
Once buy to let is attractive
Then the comparison between these two is interesting and following variable should apply
- diversification in terms of underlying assets vs. Single property
- liquidity
- costs of fund management
- intangibles like hassle of finding tenant
- internal costs of operating buy to let
- leverage ratio
Yes, same cost as trading a stock or etf.
No entry/exit fees
Unfortunately not considered ETf leader on SQ.
not to hijack your interests, but if buy-to-let is not attractive, why don’t you consider 5-6% (CHF) financing in crowd-financing rather than the 2.2% yield + Fund risk?
I’m also trying to allocate my next chunk of money somewhere.
As the SNB is lowering rates, the RE market should get another boom (lot of FOMO on the last 2 years + slowly cheaper financing options + constant influx of people) - how would I capture this if I’m not willing to drop multiple 100k’s in one basket otherwise?
My only option for small-ticket purchasing seems Crowdhouse, but I’m not quite confident with the company anymore.
Crowdfinancing seems attractive at around 6% yield (also no tax impact if I’m not mistaken), but it’s not owning anything long-term, the deals expire in 18-24 months.
This UBS thing doesn’t look bad after all, as it’s so easy - did anyone make a graph yet with “swiss property index vs UBS Direct fund”? Could be a nice hedge as we also rent our place.
The graphs should be included in the marketing documents of the funds.
Hmm, I guess you didn’t read the sentence directly after that sentence you quoted?
Anyway, I have never seriously considered crowd financing yet. I don’t know how to compare two buildings as an investment object. It is just out of my affordable range. And therefore, I don’t know how to make a decision on crowdhousing that I want to go for this project.
I think crowdfinancing (assuming lending option) is more comparable to high yield bonds. The main return comes from ability to take risk of credit default. The returns are not about the real estate market. I see it more like betting on real estate company rather than real estate market
UBS direct is more comparable to buy-to-let.
Regarding comparison with real estate market, one to one comparison is difficult due to leverage involved.
If you refer to factsheet, you will see overall returns of this UBS fund are about 57% in last 5 years.
The real estate index of Canton of Zurich is up 25% and city of Zurich is up 30% in 5 years. But this is the price index. So you need to add rental yield on top.Price trend
vs
the dotted line “index” on the latter looks very different. The real property price index almost never had a down leg in the last 7 years.
If you compare the 2 charts, the Fund started off with 3 years of zero wins, while the RE market went 13% up… ? I’m just a tad skeptical on how to get closer to the 1st chart without direct ownership.