European World ex-US ETFs

Investing / Portfolios
41

Those fees are charged by agents who sell you the fund. At Swissquote, there is a flat fee of 9 CHF for Prime Partners Funds

42

It’s on Swissquote for sure

Most likely Saxo can also add it on request because I see some other UBS funds there but not this one.

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43

In the meantime, we have the DBX, iShares, Amundi and UBS ETF. Could anyone already distill a winner among them all? Pricing history is very short and in my view no obvious outcomes. Same with AUM, they are just building up as we talk. I tend to lean towards the UBS one (diversification of Issuer and fund profile; LU is no issue for outside of US holdings I think)
 but not so sure. Do you already have a view on what ETF to best use?

44

I gave a look at this index, since I now want to invest a significant fraction of my portfolio in ex-US stocks. IMHO, the best ETF for this index is still the Xtrackers, with the UBS as runner-up.

A (slightly) more detailed comparison between the two.
Pros of the Xtrackers:

Cons:

  • slightly higher TER (0.15% vs 0.14%)

Of course, feel free to challenge this evaluation.

45

At the Moment, I as well hold the DBX ETf and not the UBS one. However, I am not sure if probably, the UBs one may not be better. Reason beeing is that its de-facto an Index Fund and not an ETF. Meaning that UBS can take some systematic deviations from the Index (e.g. upon Index Changes or Capital Events). Stats say that the effect of this was in the range of 0.03-0.05%. Meaning that it may offset the higher TER and LU domicile. Will be interesting to compare and see what of those products truly delivered a better return.

46

Can you clarify which UBS Fund we are talking about?

UBS Europe ex CH or something else ?

47

Since the title of this thread is “World ex-US ETFs”, I believe it’s this one:
UBS ETF (LU) MSCI World ex USA Index Fund UCITS ETF (USD) A-acc | LU2807512947

48

As far as I can tell, the main advantage of IE ETFs compared to LU ETFs is the lower US WHT. However, for an ex-US ETF, this isn’t relevant. I don’t think the information from MP is accurate; LU ETFs seem to be typically exempt from L2 withholding taxes (same as IE ETFs). I would expect the performance difference between IE and LU ETFs to be very small for ex-US.

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49

I don’t think the information from MP is accurate; LU ETFs seem to be typically exempt from L2 withholding taxes (same as IE ETFs).

I mean, we do not have to trust the information from MP, we can go directly to the source:

50

But in this case it’s covered by DTAA, right?

51

The linked documents include all the DTA treaties signed by Switzerland with these countries?

52

The double taxation agreement allows Luxembourg to withhold 15% of dividends, but they are not required to do so. They do withhold 15% of dividends for regular company shares. However, LU-domiciled ETFs are typically constructed as a SICAV, which seem to be exempt from withholding taxes. I haven’t found an official reference for this but it’s mentioned on Taxation of SICAV in Luxembourg.

You can also check it in ZHprivateTax. Trying to add, e.g., LU0480132876 to DA-1 results in the error “Ihre Suche im Formular DA-1 fĂŒr Wertschriften mit nicht rĂŒckforderbarer auslĂ€ndischer Quellensteuer ergab kein Resultat. Es wird empfohlen die Suche im Wertschriftenverzeichnis zu wiederholen.”, while it works for regular Luxembourg companies.

I don’t think Luxembourg would ever have become popular as a fund domicile if it imposed 15% withholding taxes on fund dividends.

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53

However, LU-domiciled ETFs are typically constructed as a SICAV, which seem to be exempt from withholding taxes. I haven’t found an official reference for this but it’s mentioned on Taxation of SICAV in Luxembourg.

Well, thanks for reporting this, I obviously did not know. I wish this information was more publicly documented. So, it is not enough to check if the fund is domiciled in LU, but one also has to check if the fund is constituted as a SICAV


54

I think most of these funds are also accumulating (except for EXU1), so L2 withholding of dividends is mostly irrelevant.

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55

L2 withholding also exists for accumulating funds. At least for Swiss funds, there isn’t really a difference and the funds have to withhold 35% Verrechnungssteuer also if they are accumulating dividends. I don’t hold any funds with a domicile other than CH, IE, LU or US, so I don’t know whether there are countries where withholding tax differences exist between distributing and accumulating funds. It would seem odd to me if there was such a simple tax loophole anywhere, but it’s certainly possible.

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56

I am a bit confused about those links
It seems to me that is simply talking about general WHT situation for LU

But as far as I understand LUX doesn’t apply WHT to ETFs or funds at least for Swiss residents.

For example LU0446734104 (UBS MSCI Europe) is marked as security with no WHT as per ICTAX. This is exactly the same situation for ishares MSCI Europe (IE00B4K48X80). If you look at the picture below. These two ETFs have almost identical returns (over 15 year period) as well. This also shows LUX & IE are equally competitive from L1 taxation

IMG_0582
IMG_05821170×1692 186 KB

I also checked UBS MSCI Emerging markets and that ETF is also classified as non-WHT by ICTAX.

57

Because this is the only legal information that I was able to find.

However, LU-domiciled ETFs are typically constructed as a SICAV, which seem to be exempt from withholding taxes.

This is the core of the problem. If this is confirmed, and it seems to be the case, then it is obvious that the UBS and DBX ETFs are identical from a taxation point of view.

However, neither me nor @jay were able to find official documentation for this exemption.

58

https://taxation-customs.ec.europa.eu/document/download/10890b8b-f0b0-4e4e-bc46-43d47f433842_de#:~:text=Distributions%20by%20Luxembourg%20Investment%20funds%2C,tax%20under%20the%20European%20Savings

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