How to recreate VT/VWCE in Finpension 3a?

Investing / Portfolios
21

Which ETFs would you invest in and what percentage each?

1 Like
22

There is now an option to disable rebalancing in the app. :partying_face:
It’s not clear to me however, what happens when new funds are added to the portfolio. Will they be invested according to the strategy? Or according to the actual/current weights?

1 Like
25

I have a similar global portfolio with 3 positions (World, EM and Switzerland). Although Viac/Finpension say costs of rebalancing are very low due to “net pooling” (can’t remember the exact expression), I wonder if that’s really the case (risk of big spreads and other hidden costs).

Anyone cared to compare 3a position’s performance to Vanguard/IShare ETF’s or to the MSCI Index? In theory, the performance should be similar (higher TER for 3a, but pension fund tax advantages)?

Also, I think 3a positions are held in Credit Suisse funds. I haven’t done research on them and still feel a little unconfortable owning something I don’t fully understand (in comparison to classic ETFs). TER might be very low, but the there’s still tracking difference which might matter. Any thoughts on that?

1 Like
27

What about this point?

1 Like
28

This sounds correct to me. They pool the trades of all users together, net them and then make large subscriptions/redemptions in the respective funds.
There’s no risks of big spreads, for these institutional funds the spreads are fixed. There also shouldn’t be any hidden costs. Source, I work for an investment foundation that sells institutional pension funds to providers such as finpension.

2 Likes
29

Great source indeed, thanks! Do you happen to know how L1WT looks like for institutional pension funds (e.g. replicating MSCI World / MSCI Emerging Markets)? Do institutional pension funds have any benefits on L1WT due to treaties etc.? Or is it just the same like for any “regular” ETF?

If I understand this article correctly, there might be advantages for pension funds: Die Vermeidung von Quellensteuern bei der Anlage von Vorsorgegeldern rechnet sich – finpension

30

They often do, yes. Twenty

31

Yes, pension funds often have better conditions for withholding taxes, resp. get more money back compared to “normal” institutional funds or retail funds.
As a recent example, Japan processes withholding taxes in March. This lead to an outperformance of 20 bps for one of our pension fund share classes compared to the institutional share class of the same fund.

1 Like
32

That’s very interesting! For private investors: Would you happen to know if US-domiciled ETF outperform IE-ETF not just for the US-share part, but for a global ETF (eg. FTSE Total Stock / MSCI ACWI) with regards to L1WT? US are reportedly clearly better than IE regarding L2WT (15% less)

1 Like
33

Take a look here in the forum, there are many topics discussing withholding taxes.

Personally I don’t own any global portfolio (apart from 3a and 2nd pillar, which I can’t influence) so I don’t care so much.

1 Like
35

This was an interesting question. Anyone with an idea?
What’s the best strategy (considering money and time saved)?
As @San_Francisco mentioned just go 99% world ex CH Blue?

36

Yes - because U.S. stocks account for such a large share of MSCI AWCI.

From bogleheads and my own (spotty) look at withholding taxes, I think they are not more tax-efficient on the non-U.S. part of these indices (Ireland could be slightly more efficient tax-wise on that, while U.S. ETFs may have slightly lower expenses).

Were it not for the advantage on U.S. withholding tax on U.S. stocks, I would certainly not recommend U.S. funds.

Though unless someone explicitly wants to recreate VT/VWCE (and just for the record), there’s only one fund I recommend:

CSIF (CH) III Equity World ex CH Quality - Pension Fund DB CH0253609066

3 Likes
37

That is specifically the unhedged version, correct? (I think there is also a DBH).

38

DBH are the currency hedged shares, yes.

2 Likes
39

Would you recommend the hedged one all alike in that case?
I’m sorry, I’m a little bit confused if you named specifically the unhedged one as it aligns with VT/VWCE also being unhedged.

40

We discussed this previously on the forum, and I think the (more or less) consensus was that it doesn’t make a meaningful positive difference over the long term (for equity indices - bonds are a different story).

2 Likes
41

it doesn’t make a meaningful positive difference over the long term

Thank you for explaining, I must have missed that or had not yet joined.

42

@iPappnasei I like your portfolio, seems pretty accurate. Did you switch to the Swisscanto funds or not?

1 Like