Frankly for pillar 3a?

Banks, Insurances & Third Pillar
76

Alright, The transfer order was put on Friday, for Tuesday. My bank released the money early morning on Tuesday. Frankly. received it early morning on Tuesday (0 day delay). The money was invested today, so a 3 days delay.

I’ve transfered CHF 500.
CHF 0.11 have remained on the 3A account.
CHF 499.42 have been invested (99.9%)
The buy in fees in the Extreme 95 Index fund were CHF 0.47 (0.094%, which is less than the 0.1% displayed on the factsheet).

My guess is that investing in an active fund would have taken 2 days but I won’t try it because these parameters… are acceptable. :sunglasses:

This is a happy panda.

Edit: edited the invested amount and fees to display them more accurately.

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77

Has anybody taken advantage of their 50 CHF voucher? How does that work exactly? It’s a voucher for their fees, but only for the first transaction (where I guess you will struggle to ever use much of that) or the first 50 CHF of all future transactions or something else entirely?

EDIT:

In case anybody else is interested in the voucher: You don’t have to pay the first 50 CHF on fees, if you jump through all the hoops and for as long as the voucher is valid. The last part can be tricky: The first code they sent me was valid until 31.12.2020, i.e. for another 2 weeks, which obviously was kind of a joke.

When I pointed that out, they sent me another, valid until the end of next year. Much better.

78

Some small sources of worry after a month of use:

  • the “all-in” fees have been deducted today. They’re taken out of the cash part (which is very minimal with the autoinvest setting on) so I am now leveraged (albeit for a very small amount), with CHF -0.14 on each of my 3 accounts.

  • I’ve opened the 3 accounts at the same time, have transfered the money at the same date, all 3 were on autoinvest, so invested at the same time. The “all-in” fees are calculated on an average of the value of the account over a time period. That period is 34 days for two of my accounts and 35 days for the third. The good news is that that period was longer than the time I’ve held these accounts, so the average (which isn’t the same for the 35 days account and the two 34 ones) is lower than the actual average value of my accounts since their opening. This shouldn’t apply for the future occurences since the accounts are already existing at the start of the accounting period.

  • All three accounts have the same CHF 0.20 “all-in” fee. It’s displayed as 0.47% of CHF 459.60 (or CHF 446.46) (average wealth), which would be CHF 2.16 or CHF 2.09. I’m guessing the 0.47% is annualized and the 0.20 fee is rounded, so it’d make sense, but that’s still pretty opaque…

  • while the 0.47% “all-in” fee displayed for the calculation is the correct one, there’s still a small message below displaying the fee as 0.48%. It’s not major at all but shows that the app is not totally updated when the fees evolve.

  • the shares class they’re linking to for “historical performances” are the V class while the shares that have actually been bought on my accounts are the N class, which are the target of the “view Extreme 95 Index details” link, which is accurate (as ascertained by the price and number of shares bought on the transactions).

On the plus side, we’re nearing the 0.46% threshold, so the fees should go down in the future.

All in all, easy to use but very, very, very opaque.

79

I agree. We don’t know the buy/sell fees. We don’t know the forex fees. The fund is hedged which has an impact of around 1% less performance each year.

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80

I mean, we don’t even know its benchmark, how passive is a passive fund without an index to track?

81

Frankly has launched an active 95 product (on the “focused on opportunities” tab): frankly. | Top investment products

It’s using bonds for the 5% part, the fund has only 120K under management. I’m not impressed but we will see.

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82

I think you mixed up the outstanding shares with the total market capitalisation. It looks like it is 100x more at a share price of 108 = CHF 18m (which is still not very much for a fund).

83

That’s possible. I recall looking at the share class volume, which now stands at 18.16M, which is a bit more reassuring. I guess it will keep going up in the future, for as long as the share value goes up, at least.

84

Hi all, my gf has an account with ZKB so I thought it would be maybe somewhat easier/logical for her to create an account with Frankly. In hindsight, Frankly does not really seem to be integrated with the rest of ZKB experience. She has never had a 3a account till now. Of course I want her to go with 95 Extreme :slight_smile: as she currently invests 0% of her savings.

I would like to approximate the cost of hedging. Any ideas of how much of the entire portfolio is hedged and how big of an annual trailing loss vs unhedged should we see? I know, if exchange rates fluctuate, we can either win or lose on hedging, but I’m assuming a scenario where CHF-USD exchange rate stays the same.

85

The base scenario is that the rate will evolve as expected, not that it will stay the same. So your scenario is a random one

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86

I disagree. Is there a difference between a fluctuating exchange rate and a fixed one if in the end the fluctuating one comes back to the starting point? It’s hedging, it’s a bet. You win or lose 50% of the time, in the long term you’re just bleeding fees. I want to ignore the potential gains-losses due to the bet, and only count the cost of hedging.

87

If we define the word “fluctuating” as an equivalent of tossing a coin with a 50% chance ; It is not fluctuating around today’s rate of exchange. It is fluctuating around the loss that the USD is supposed to have. The cost of hedging is the expected loss on your USDs in CHF.

The probability of the rate being the same as today’s rate is the same probability as the USD losing value twice faster than expected.

89

Your base scenario should be a USD devaluation to CHF. Central bank interest rate difference, so something like 1%/year currently.

You’ll profit from hedging if USD loses more than that.

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90

Ok, and this is probably not given forever, I guess this hedging is rolled every 3 months or so, each time to the current conditions.

91

Shouldn’t she (ultimately) decide for herself?

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92

She says: I don’t know, you decide.

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93

Hard to tell. According to the factsheet, 72.37% of the assets of the fund are denominated in CHF.

Of the total assets of the fund:
30.09% are swiss stocks
2.51% are swiss real estate
0.18% are CHF held for liquidity purposes
For a total of 32.78%.

There should be roughly 72.37%-32.78% = 39.59% of hedged assets in the fund. Now, to know the cost of that…

3 Likes
94

Regarding the cost of hedging, I am a complete newbie on the matter but as I understand it, it is a futures contract on currencies, so the real cost is linked to the difference between expected and real currencies exchange rates + fees.

VIAC has two funds that can be purchased as unhedged or hedged:

1Y/3Y/5Y annualized returns in CHF varry:

  • Large Cap unhedged: 32.67%/11.47%/12.52%
  • Large Cap hedged: 36.29%/12.12%/12.19%
  • Small Cap unhedged: 47.14%/8.99%/11.88%
  • Small Cap hedged: 50.25%/9.64%/11.6%

So, in the recent past, hedging has had a positive effect on these funds but it’s the opposite on the 5Y timeframe.

That’s only one of the effects on returns of Frankly’s strategies, though. Their chosen funds and their fees have probably a bigger impact than just hedging itself. I’d compare total returns for the various 3a providers and use that to make my decision.

95

On a custom strategy with Viac, going to hedged etf was the only possibility to increase your World shares exposure but it may have changed (in order to keep a Swiss share not super high ).

I will go without hedged etf if it is now possible. I will try next year when I could change my Portfolio exposure.

96

Ha! I’ve just answered a survey with a lot of questions regarding all-inclusive banking offers, all-in fee investing solution and in app banking, linking the Zürcher Kantonal Bank and Frankly. Sounds interesting, though I’m not sure they’ll come up with a competitive offer and good transparency.

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