ETF FTSE in CHF instead of EUR?

Good morning!

I have a question regarding the current ETF of Mr Moustachian :slight_smile:
This post : My investment portfolio in Switzerland says " *if you have chosen Degiro as your broker, then consider buying this VWRL ETF on the Amsterdam stock exchange (known as EAM or Euronext Amsterdam), as you won’t pay any transaction fee :).

I see that this ETF is also available on the SWX with a price in CHF.
If I use the EAM then to buy in EUR Degiro will have to convert my CHF into EUR, and then EUR to CHF when I will withdraw (knowing that CHF to EUR will probably increase in the future).

My question is should I instead invest in an ETF in CHF to avoid any conversion fees and conversion risk from EUR to CHF in the future ?

Thanks a lot for sharing your thoughts!

So, what is your question, actually?

The price of one VWRL unit traded in CHF divided by the price of one VWRL unit traded in EUR will be always equal to EURCHF currency pair, up to some rounding difference of, say 0.1%.

If your question is about Degiro fees, figure them out and calculate what is better for you.

P. S. Note that you can open an account with degiro.ch and let Degiro handle CHF to EUR exchange, or open an account with one of EUR-based Degiro branches and do FX conversion yourself.

Apologize I’m struggling to clearly ask clear questions - here are 3 things that pops to my mind :
1 - If I use the SWX exchange instead of EAM, I will avoid the AutoFx exchange rate no ?
2 - If I use the EAM and in 10 years the EURCHF decrease by 30%, my investment will be lower than if I invested it in CHF no ?
3 - If answer to question 1 and 2 are no, then is there still any interest to use SWX instead of EAM ?

Thank you very much for your support and apologize again if my thoughts aren’t clear.

  1. If you buy an ETF listed in CHF with CHF then you won’t need to do any currency exchange, yes.
  2. No, any change in exchange rate will immediately be reflected in the ETF in CHF (if ETF in EUR is flat, so +0%, but EURCHF drops 2%, the ETF in CHF will down 2%)
  3. If the difference betweens costs for buying at SIX and at EAM are higher than the currency exchange fees, then it is cheaper to buy at EAM.

1 - Probably. But that exchange fee should not be huge anyway, and you might even recover it by having better spreads on the bigger EUR exchange.

2 - NO! You always buy the same thing (shares of companies). If e.g. the EUR devaluates, then the ETF just becomes more valuable (in EUR). Imagine that you buy 2 physical bars of gold, one with CHF and one with EUR…
All scenarios that you can think of, where you would miss out on some exchange rate profits come from additional currency speculation that you somehow built into the scenario.

3 - Not really. You would have to compare the effects mentioned in answer 1. But it will not make any significant impact on your investment.

Potentially dumb question though, as I’ve never sold - but intend to in some unspecified time in the future.

I am buying VWRL on the SIX, using CHF, the fund currency is USD, dividends are paid in USD. I am ok with the second part as I am reinvesting in securities traded in USD, however have not thought about selling, will I get USD once I decide to sell VWRL? And if that’s the case then there is an exchange rate/inflation issue isn’t there?

I mean I don’t make or spend USD, and have no intention of ever moving to the US, while CHF and EUR are the two currencies I use and intend to use in the future.

typically if you buy in CHF you’ll get CHF when you sell, but as explained it doesn’t matter, if you get USD and convert immediately to CHF you’ll get the same number of CHF.

(replace ETF with a gold bar and you’ll see why it makes sense :slight_smile: )

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Think also about costs that would be incurred when you decide to sell your investments. Fixed costs are okay, but a 0.25% fee for the currency exchange after many years of compounding can be significant.

VWRL on SIX is only available in CHF on most brokers. So when you sell, you will get CHF.
Dividends of course are in USD.

You can try to sell 1-2 shares and see what happens :slight_smile:

For SSAC, which have two currencies on SIX, CHF and USD, it’s actually possible to buy in both currencies. But the one you buy in is the same for the time when you sell. I checked with Swissquote, if I were to change the currency of my position before sale, it costs 50 CHF per position.

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