How to be exposed to EUR short-term money market

Investing / Portfolios
1

Hello. I am a 40yo swiss resident with some assets invested in ETF on postfinance e-trading, plus all the 3rd pillar on VIAC. I am currently mostly exposed to VWRL, but I would like to allocate some money to a safer option and take advantage of the high interest rates of the short term euro money market. I do not care about EUR/CHF currency risk as I plan to spend a portion of my savings in euro anyway.

I could buy some ETFs such as:

The latter can be bought on SIX, where it is quoted in CHF. This is good as I’d avoid converting the currency. But it makes me suspicious the fact that this ETF has apparently very rare exchanges on SIX. Why is that? Is there anything that makes it unsuitable for a swiss investor, apart from the unhedged currency risk?

Another option I have is to just move my VIAC assets to a similar asset type, but I don’t see a clear option that gives me exposure to short term euro money market.

Can you advise? What would you suggest?

Thank you very much!

2

I think the currency risk is reason enough that this is not a suitable investment for the average Swiss resident. And I guess that many people (or institutions) who want to invest in EUR bonds / money market, will do so using a broker with low currency exchange fees, in which case one might as well trade on an European exchange where liquidity will be higher (and exchange fees lower).

Also keep in mind that there are ETFs traded on SIX that are perfectly suitable for Swiss investors but still have relatively low volume (e.g. VEVE).

If your reasoning for investing in EUR money market is that you anyway will (also) spend EUR in the future, why do you think it’s better to exchange CHF to EUR when selling your EUR ETF instead of already exchanging CHF to EUR now when buying the ETF? I.e., you anyway have to do the exchange at some point, it seems reasonable to me to do this when/before investing in the EUR ETF. You’d likely want a foreign broker for that, though.

Assuming you don’t want to particularly bet on EUR, i.e., we assume the interest rate parity holds for your investment period, it would be better to invest in CHF bonds from a tax perspective. Have you already seen this wiki? Short guide to CHF fixed income options

3 Likes
3

Thanks for your answer!

Well, I can buy the SMART ETF on SIX in CHF at roughly the same price that I can buy it on XETRA in EUR. Does anybody know whether it’s possible to sell an asset on a different market than the one it was bought from? So I could in the future sell the ETF on XETRA for EUR and save on the terrible currency conversion fees of postfinance.

I know that IB would be much better but I’d prefer not creating another account. Apart from currency conversion, Postfinance is fine for me.

4

It’s possible in principle, as long as the share class (ISIN) matches. At Swissquote you have to pay CHF 50 + MWST for this (Börsenplatzwechsel). It might be the same at PostFinance, although they use a different term (Depotstellenwechsel). I would guess that’s the same thing but I’m not sure.

1 Like