Diversification of brokers

Investing / Brokers
22

I don’t understand it as being the same. In the case of Saxo, my understanding is that the segregated account is in Saxo’s name (I could be wrong) while, at IBKR, the claim is that it is in your specific name.

Edit: the mention “over which you will have a perfected first priority security interest.” is what makes all the difference in IBKR’s phrasing, in my understanding. /Edit

I wouldn’t trust either but I’m very distrustful of replacing basic regulatory protections by more complex schemes. Others would not care as much as I personally do and may trust IBKR further than I can throw them (which I don’t).

23

I will probably open a degiro account to get used to it and then move to a 50/50 asset distribution over the next years.

As I currently have IBRK+VT, on the new broker potentially also another ETF, like ACWI. Not finally decided yet.

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24

To those who have IBRK and a Swiss broker: How do you handle the dividends that you get in USD? For example, on Swissquote, you cannot get the USDs back to IBKR, as the fees outrageous. Do you buy ETF shares with these USDs (does not make much sense for VT, though, as the fees are very high again)? Or do you change them to CHF and enjoy a nice meal in a restaurant? On PostFinance you could use the quarterly fees to buy some ETF shares. But some ETFs only pay dividends once a year and these quarterly fees have to be used up within a quarter.

25

On PF I wire it back to IB twice a year (~20 CHF per wire)

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26

I have IBKR and DEGIRO. As I approach 1M on IBKR I decided not to inject fresh money. The dividends from VWRD and VDEM (~ $10,000 per year) shall be changed to CHF and invested in CHSPI (also on IBKR) on a quarterly basis.
If I will deploy fresh money in 2025, it will go to DEGIRO and ACWI in CHF.
I will think about a Swiss broker in maybe 3-5 years, hoping that competition will bring about even better offers than today.

27

I use only SSAC / FWRA on Postfinance, which are reinvesting the dividends automatically = no USD to convert or to move around.

However I am aware that this costs me around 0.08% in TER. The alternative I am thinking about is to use WEBG with 0.07% TER + shipping the USD back to IBKR like @nabalzbhf in the future…

But I am not sure if this is worth it? lets assume 500k in ACWI:

SSAC = 500’000/100x0.20 = 1000.- in fees per year (TER)
FWRA = 500’000/100x0.15 = 750.- in fees per year (TER)
WEBG = 500’000/100x0.07 = 350.- in fees per year (TER) + 20.- for shipping back the USD + 2.- for the USD convertion at IBKR + higher spread? + did I miss something? Will WEGB be able to keep that low TER, since its a pretty new fund…

3 Likes
28

I can’t find that fee on postfinance.ch, do you have a pointer? Is it because you’re using “recipient receives full amount”?

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(International payment | PostFinance)

29

That’s the price with SHA wires if I recall correctly (which is usually the cheapest), so taken by one of the intermediary.

30

I transfer the USD dividends from PostFinance to my Yuh Account and buy VWRL there. The transfer is free. Should work also with SQ.

3 Likes
31

I’m also thinking about buying WEBG. Now I’m with VT for the moment. But the outcome is the same.
There is also an accumulating version of WEBG called WEBN. But on IBKR only the EUR version is available. Probably it doesn’t matter, but then one would have salary in CHF, ETF in EUR, and dividends in USD. :smile:

32

Maybe ask IB to add it? Bloomberg ticker for the USD version is WEBQ GY (and it’s fairly recent, added in October 2024)

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33

My strategy is to simply buy accumulating ETF for SQ which is SPDR ACWI

Otherwise you have one of the following three options

  1. Convert USD to CHF at SQ & pay 0.95% fx fees . For smaller amounts , this might be most practical.
  2. Transfer USD to IB or somewhere else to convert. If I remember transfer out costs 10 USD
  3. Buy an ETF (using Dividends) which is sold in USD on SIX like IMID, WEBG etc.
34

I’ll ask them. This is a good idea. Not so sure yet, though, if I want to move away from VT and chill.

35

I’ve opened a Charles Schwab account a while back. It’s free, transferring positions from IB is free as well and it supports automatic dividend reinvestment. I do my trades at IB and every now and then transfer positions from IB to CS to achieve an approx. 50:50 split.

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36

Is the contract is with an US entity ?
Then the assets in that account would count as US situs assets as well?

37

Yes, Charles Schwab is a US broker.

38

Tho you might be using the UK subsidiary instead of US.

Only the US domiciled assets, not necessarily all assets. (But from what I understand a US broker will count USD cash as US domiciled while a non-US broker, e.g. Schwab UK, wouldn’t, at least that’s what people say for IB US vs. IB UK)

39

Regarding the US estate tax topic: For Charles Schwab (and probably for other brokers as well), the whole corporation operates under US law (therefore, US estate tax will apply - irrelevant, if you are using Schwab HK or IBKR EU, if I understand that correctly:

The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (“Schwab”) (Member SIPC), is registered by the Securities and Exchange Commission (“SEC”) in the United States of America and offers investment services and products, including Schwab brokerage accounts, governed by U.S. state law. Schwab is not registered in any other jurisdiction. Neither Schwab nor the products and services it offers may be registered in your jurisdiction. […]

For UK residents there is Charles Schwab, U.K., Limited and they are operating under U.S. regulations, as well.

So, for us Swiss residents, we will have an account with the US-entity anyway.