Hi all, I just stumbled over that new etf which seems to be innovative in its replication form: its a mix of swap based and physical to avoid uswht. Their „backtest“ claim to outperform other world etfs by 0.22%, if that promise holds, its basically the cheapest world etf on the market… sounds too good to be true IMO…
What are your thoughts?
I think if there is a way for the people to “avoid taxes”,
the tax authorities will find a way to still “simulate” the taxation and get their share. 
(like with Acc funds)
This is indeed very interesting.
TER of 0.17% is quite OK as well, especially when considering that the “recovered” WHT should be around 0.15%.
Switzerland will indeed tax it.
On US side, it’s not an oversight and it’s an explicit tax code decision to not have withholding for broad index (search for rules related to indices in 26 CFR § 1.871-15 - Treatment of dividend equivalents. | Electronic Code of Federal Regulations (e-CFR) | US Law | LII / Legal Information Institute), while the default for swap is that they are actually treated as if there was a distribution.
So at this point, I think it’s likely to stay this way for the US (and it’s a decision whether you’re comfortable with synthetic vs. physical replication, counterparties, TER, jurisdiction, etc.)
that’s not a way to circumvent taxes for you as an individual. It’s for the fund to avoid withholding taxes, and you benefit indirectly. Synthetic US etfs are already a thing for many years. And they do have a virtual dividend in CH.
But I wonder how much the effect will be in the future. Current dividend yield of the S&P is like 1.2% (and decreasing every year) at 15% withholding (minus swap fee), there isn’t all too much to save anymore.
I think this ETF might be practically equivalent to WEBG in terms of total cost of ownership
The idea is good. It is using a bit what I proposed on this thread and making in one ETF
In fact, you can do that yourself with 3 ETFs:
The cost with this combination is around 0.09%, but you need to rebalance
The new ETF also has synthetic replication of some Chinese assets, probably because of WHT as well.
Rebalancing and potentially higher costs (fees for buying, transferring etc. of 3 ETFs instead of 1) would probably not be worth 0.08% to me.
The problem is Switzerland taxes Swap based ETFs just like it taxes Physical ETFs. I guess you can save a tiny bit of money if your marginal tax rate is below 15% (because DA-1 only recovers the full amount if your tax rate is above 15%), but then you are stuck with Synthetic ETFs which are a bit more risky as you have a counterparty bank. Afaik no country has a WHT of more than 20~25%.
I think ETF domicile is more important if you trying to save every single penny in fees, as L2 WHT for each country differs based on ETF domicile.
See ICTax - Income & Capital Taxes as an example.
They don’t compare with the cheapest ETFs (just with the most popular e.g. those with 0.4% TER)
Looking at what it holds, it does look like it’s mostly constructed as a fund of fund btw (they use the swap version of developed + US + emerging, and then to avoid double counting the US they add some physical sampling of non US on top).
I’m actually slightly puzzled, since you could do it more cheaply even with just xtrackers using synthetic MSCI USA (0.07% TER), developed ex-US (physical, 0.15%) and emerging swap based (0.18% TER)
The problem with ucits regularion is that any single holding in an etf can be a maximum of 20%. So they need multiple funds to do the same. And probably why this looks a bit weird.
Kind of stupid regulation tbh, should not count for single positions that are in itself funds adhering to regulation.
What do they actually track? Its the net index… if i read the msci docu, i understand they assume 30% withholding tax in those indexes.
So you would be worse off, than physical replication in usa or ireland, no?
Yes, they should be able to beat the index by ~2pb.
(which seems to match when you compare https://www.justetf.com/en/etf-profile.html?isin=IE00BJ0KDR00 and https://www.justetf.com/en/etf-profile.html?isin=LU2581375073 tho there’s just one year of data)