Hello,
I want to invest in an ETF that replicates the SMI but I only found ETF SMI Distribution and not accumulating.
Do you know an ETF that replicate the SMI in accumulation ??
I have found this ETF: CH0590186661 / But I don’t know if it’s a good etf to replicate the SMI what do you think ?
Swiss SMI/SPI etc. ETFs cannot be accumulating, because they have to pay you Dividend minus withholding tax, and you should be able to reclaim these taxes.
ETFs with other domiciles will pay 35% withholding tax, which you can’t reclaim, so they are tax-inefficient.
As I understand it, Swiss withholding taxes paid by CH-domiciled accumulating ETFs can be reclaimed as usual. Besides the very new ETF mentioned by @Tristan2001 another example for such an ETF is ICTax - UBS MSCI Switzerland IMI A-acc. On the ICTax page you can see ‘Gross return with VSt.’ and you should get 35% of that back after your tax declaration. That said, it might be difficult without an ICTax entry.
The SPI ESG Weighted index includes a lot more (smaller) companies than the SMI and based on the ESG rating some companies are excluded or over- or underweighted. The performance of the two indices might be relatively close but they might also diverge substantially over time.
If you’re happy with the ESG aspects, it looks like a reasonable ETF to cover Swiss stocks. The main downside I see is that it’s a very new ETF and so far it’s tiny (less than 12M in total assets). This may result in larger bid-offer spreads and there is a risk that the ETF will be liquidated if the volume remains small.
Why do you want an accumulating ETF? Tax-wise there is no real difference in Switzerland, are you taxed outside Switzerland? The only other advantage is that you don’t have to manually reinvest dividends, which may involve broker fees and/or stamp duty. However, if you’re regularly investing (part of) your savings into the ETF, it likely doesn’t matter much.
I’m not sure if this is correct. While I’m not aware of accumulating ETFs, I know that there are accumulating traditional index funds on several Swiss indices. Their tax situation would not be different from that of an ETF. I think @jay is right.
Thank you for your reply @jay
I want to invest in an accumulating ETF because it looks more simple with the tax and as you say I don’t have to manually reinvest the dividends.
Moreover I heard that it can be complicated to recover the withholding taxes in Switzerland.
And what happens if I hold shares in the ETF and it’s liquidated ?
35% withholding taxes are deducted in both cases and recovering Swiss withholding taxes is not difficult at all if you’re anyway filing taxes in Switzerland. I’d even argue that it’s slightly simpler with distributing ETFs as then you see the withheld amount on your broker’s report. If the ETF is in ICTax and you’re filing your taxes online (or with an offline ICTax database), proper tax declaration should be simple in both cases, though. At least for buy-and-hold investors with few transactions.
You can either sell the ETF before it’s liquidated (there will be an advance notice) or wait until liquidation at which point you should get the NAV in cash. I.e., you shouldn’t lose any money except for trading fees/spread (and possibly stamp duty) when switching to a new ETF, assuming you don’t stay out of the market for a significant amount of time.