[IB+VT+3a] Investment Approach

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— This post is primarily addressing beginners and is referring to the equity/stocks part of a portfolio. Please consider your total net worth (incl. pillar 2/3) and the overall asset allocation (stocks, bonds, cash etc.) based on your risk profile (time horizon, mentality). —

BANK/BROKER

Interactive Brokers (IB/IBKR)

You prefer a different or additional bank/broker? That’s fine, there’s a number of good ones. But do take a look at the argumentation below and compare it to your own choice.

  • Very low fees: close to zero for ETF/stock transactions, close to zero for currency exchange, no custody fee, no Swiss stamp duty

  • High-quality, long-established broker

ETF/FUND

Vanguard Total World Stock (VT)

You prefer different or additional ETFs/funds? That’s fine, there’s plenty of good ones. But do take a look at the argumentation below and compare it to your own choice.

  • TER: 0.07%
    = very low annual fee

  • Fund size / AUM: ~$30B
    = very big fund (which is good for lower spreads/costs)

  • Domicile: USA
    = favorable ratio of reclaimable withholding taxes, as majority of [cap-weighted] global stocks are U.S.-based

  • Diversification: ~9700 companies/stocks

More on what’s in it:

~67% large-cap companies
~18% mid-to-mid/large-cap companies
~15% small-to-small/mid-cap companies

Countries/Markets:

vt-countries

Why it’s important to have a broad diversification if you’re not a seasoned investor:

evolution-countries
evolution-countries807×397 72.4 KB

Also: The Case for Global Investing

Sectors:

vt-sectors

Why it’s important to have a broad diversification if you’re not a seasoned investor:

evolution-sectors
evolution-sectors707×373 127 KB

Companies/Stocks:

vt-companies

There’s not a very high exposure to a single company or the top ten companies.

PILLAR 3A

See posts below

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I agree with that. Probably easiest ‘set and forget’ approach. When it comes to implementation, many of us use VIAC or Finpension.

What are the ETFs within these providers that one would use to implement this kind of strategy?

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VIAC has the problem that you need a certain % im CHF, so you can’t get a similar exposure as the VT fund. The easiest set and forget would probably be using their Global 100 strategy.

At Finpension you can also use their predefined Global Strategy for set and forget. (Personally I use the World ex CH Quality Fund)

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VIAC:

Screenshot_2023-11-20_20-23-34
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Finpension:

Screenshot_2023-11-20_20-24-04

Looking at the 2 strategies you mentioned, it seems that both have 40% Swiss regional exposure, but finpension has 60% CHF exposure which suggests they might be hedging FX risk too.

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Yes, but at Finpension you can bypass it with a custom strategy choosing your own funds, at VIAC you need the 40% exposure even with a custom strategy.

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Adding this for reference regarding 3a via Finpension