Which part was unexpected ?
1 Like
That in CHF, the Swiss market performed way better than the world market. Even when comparing the worst Swiss with the best world index, the Swiss index achieved 17% more returns each year.
Maybe I have to rethink my “no home bias” policy" 
3 Likes
Ahh I see
Actually MSCI Switzerland has outperformed MSCi world as well as MSCI ACWI IMI since 1994. Data
But since Swiss companies have higher dividend yield, it could be that on post tax basis, it’s more or less very close.
For future - who knows what happens. 
2 Likes
I guess not only in CHF but also in USD. Meaning that if you would be a US investor you would still have had higher return when going into Swiss market than world ETF? (provided you have low exchange rate fees and convert those CHF returns to USD in the end again)
1 Like
I would try to move the starting date 3-5-10 years forward and backward to see if the results hold before using them to ponder asset allocation.
That being said, Swiss stocks are of mostly good companies and the SNB has managed the exchange rates as best as it could to protect exports so I’m not overly surprized by the results. As stated by Abs_max, the share of the dividends in the total returns probably affect the after tax picture, though.
2 Likes
Dont forget that we have zero withholding tax and ~10% of the dividend is distributed as capital gains, tax free. Might move the needle a little.
1 Like
I increased the time period to end of March '95 to July '24, but I only have data for SPI, SMI and ACWI IMI:
| Mar '95 – Jul '24 | Ø p.a. | Ø p.a. (CHF) | Ø p.a. (CHF, real) | total | total (CHF) | total (CHF, real) |
|---|---|---|---|---|---|---|
| SPI TR | +8.15% | +8.15% | +7.49% | +897% | +897% | +732% |
| SMI TR | +8.15% | +8.15% | +7.49% | +897% | +897% | +733% |
| S&P 500 TR Gross | +10.34% | +9.34% | +8.67% | +1’694% | +1’273% | +1’047% |
| MSCI ACWI IMI Gross | +8.05% | +7.07% | +6.41% | +869% | +642% | +519% |
| USD/CHF | -0.91% | — | — | -23.5% | — | — |
| Inflation CH | +0.62% | — | — | +19.8% | — | — |
4 Likes
By the way, I am assuming to get to real returns, Swiss inflation is being used. Makes sense as investor here lives in Switzerland.
1 Like
To be honest, these results are very good irrespective of allocation. Almost 6% real return in CHF is great for world ETF. I wonder if such returns would be possible in future. Time will tell.
2 Likes
Yes, Consumer price index:
1 Like
Do you need hold the ETF at a Swiss broker for that, or does it work with IBKR as well?
Ibkr works for that.
2 Likes
Yes
But US investor would normally compare this with US stock market.
Same.
I recall the narrative (here and elsewhere) being that we have a big home bias anyway via our 2nd pillar, but the 2nd pillar is not geared for growth - for good reason. My own is about 30% in Swiss equity, 10% foreign, the rest is bonds, CDs, MMFs, and expected growth quoted is a mere 1.5% pa, that’s basically almost matching a standard savings account rate.
I feel like I should have used Gross and not Net for MSCI World/ACWI, because the Total Return indices for SMI, SLI and SPI (there are no separate Net and Gross indices, just one called Total Return) are most likely without withholding taxes as well.
I have now included the S&P 500 in above tables as well. As the data for it is before taxes (Total Gross Return), and from what I’ve gathered the data from SIX for the Swiss indices seems to be Gross as well, I changed the values of the MSCI indices to Gross.
SPI and S&P 500 go back farther, so here’s the data for the last 36.5 years:
| Jan '88 – Jul '24 | Ø p.a. | Ø p.a. (CHF) | Ø p.a. (CHF, real) | total | total (CHF) | total (CHF, real) |
|---|---|---|---|---|---|---|
| SPI TR | +8.75% | +8.75% | +7.49% | +2’038% | +2’038% | +1’295% |
| S&P 500 TR Gross | +10.88% | +9.56% | +8.28% | +4’230% | +2’701% | +1’727% |
| USD/CHF | -1.19% | — | — | -35.3% | — | — |
| Inflation CH | +1.18% | — | — | +53.3% | — | — |
2 Likes
Thanks for this information. I always had in mind something closer to -2% to -3% p.a.
As you can see from the 2004-2023 table above, it has indeed been around -2% p.a. for the last 20 years.
Could you please add the calculus/chart for a savings account? Just kidding.
2 Likes