Monthly or quarterly purchases of SMI ETFs

Hi

I would like to start implementing the purchase of UBS SMI / or SPI ETFs on a monthly basis on IB. The amount should be around 1000 to 1500 CHF per month.

When I looked at the purchasing fees, IB displays a fee of 1 to 6 USD / CHF.

This is a quite high percentage of the investment (annually) if the ETFs are purchased monthly.

What are your experiences? Do you simply invest quarterly to save on fees? Or only buy US based ETFs (fees are incredibly small compared to non ARCA traded ETFs) ?

How is it with the fees for VWRL if you buy “small” amounts every month?

Best,

cyberhigh

Why so much SMI/SPI? Couldn’t you cover that with VIAC/3rd pillar?

Why this crap? Half of SMI is just 3 companies, it’s way too much concentration risk. And don’t let the name of the index fool you - not that much of its revenue actually comes from Switzerland.

Well, a swiss broker would charge you 2.25 Fr just for stamp duty alone

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Here the SMI family index composition and weightings:
https://www.six-group.com/dam/download/sites/exchange-services/Factsheets/smifamily_factsheet_en.pdf

Still I do think that there is some reasons why to get invested in an SPI index, because as it is domiciled in CH, there is no gain taxes to pay (please correct me if I would be wrong here!)
https://www.ishares.com/ch/individual/en/products/264107/ishares-spi-ch-fund

Not sure what you mean. Capital gain is not generally taxed in Switzerland, regardless of fund domicile.

Totally agree. Investing in SMI comes close to stock-picking. That’s why I’m at 7% SMI and 30% SPI Extra in VIAC.

And like you said, 90% of the revenues from SMI companies are made abroad. So nothing really “Swiss” about it.

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Sorry my bet. Because it is domiciled in Switzerland and if you are taxable in CH, the dividend should be less taxed as when they would be domiciled in Luxembourg or Ireland. Again looked it up, but couldn’t find the thread here in the forum anymore.

I don’t think that’s correct, at least for Ireland. There a dual taxation treaty that should prevent that.

Edit: actually no, there might be up to 15% WHT. I wonder if that’s recoverable.
Edit2: for Luxembourg found a nice deck with all the applied WHT: https://assets.kpmg/content/dam/kpmg/lu/pdf/lu-en-withholding-tax-study-2018.pdf also made me learn about how EU it forcing members to treat local and foreign EU funds similarly (e.g. Santander case law), I wonder if that will impact Switzerland at some point.

Hi

I still want to invest some of my money into the SMI, since I believe to support our local economy to a certain extent (Roche, Novartis and Nestle might be global players, but they still create a lot of jobs in Switzerland, help attracting expads etc…)

They have enough money.
Better buy/consume directly from swiss manufacturers and KMUs.

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They are giant soulless transnational corporations that have little to do with Switzerland besides the fact that due to some historical curiosities they happen to have their headquarters here. Nestle makes only 2% sales in Switzerland.

Transocean which was not long ago one of top 10 SMI components is an american company, which literally moved its headquarter to Switzerland just for tax reasons and has nothing but a nominal HQ here. Are these tax dodgers the kind of thing you want to invest your money in??

You want to make a difference to the local community with your money? Buy products from local farmers and KMUs, stop shopping in Germany, donate to local charities etc.

Even if SMI companies were tighter connected to Switzerland, investing in their stock will have highly indirect, almost negligible, effect on the swiss economy. They are not some pre-IPO startups and don’t actually get your money directly to do something useful with it. You’re merely giving your money to other people who invested in Nestle et al in the past. Some of these people are current Nestle et al employees/managers/directors, probably many are swiss residents like you, so hopefully they’ll spend a part of your money here in Switzerland which would move the economy a lil bit, and that’s about the only connection your SMI stock investment will have with swiss economy. Buying local products, especially from small local manufacturers, on the other hand has a much higher direct economical effect - it contributes directly to GDP, they’ll pay taxes on your money, spend it locally on some another local things (food, rent, etc) which will move GDP further, etc.

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That statement is somewhat unfair.
Transocean is certainly such an example, but they left SMI again / or went bust. There’s no significant company in the SMI or SPI like that (at the moment). Glencore (HQ in Zug) theoretically would be, but they are not traded in CH market.
For tax dodgers it’s more relevant where the HQ is i.e. where the biggest profits are taxed, not the main stock exchange listing.

Nestle’s biggest market is the US. Why aren’t they moving their HQ there? My money is on tax rather than their historical roots. And the rest of SMI is like that too.

Alcon (though they have been owned by Swiss companies for a while), and Richemont. For the latter, it just was a bit longer ago, and the name sounds prettily French.

Being frugal with Interactive Broker (instead of a CH company) seems OK, but groceries shopping in Germany or France not? Don’t want make a big fuss about this, but invest or buy groceries where and what ever you want. If it is legal, it is a personal choice.

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Sure, sure, but then your money will go into german economy rather than swiss. If you can live with this guilt…

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There’s no guilt in not following intellectually handicapped economic nationalism. Besides basic economics teaches us that trade improves GDP of both sides. So putting the moral value of argument aside, it’s not even valid theoretically and empirically.

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Intellectually handicapped is not understanding that there are valid reasons for supporting the area where you live. This has positive second and third order consequences. The world is a bit more complex than what the economics classes teach you.

“I am, at the Fed level, libertarian; at the state level, Republican; at the local level, Democrat; and at the family and friends level, a socialist.” Taleb has more interesting thooughts on this topic.

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Home-bias is bad, try to be diversify woldwide.
SMI hold 3 major companies which is not a diversify index. SLI is a little better.
If you would like to support swiss companies, it is better to invest in small and mid cap: SMI and SPI extra

By working, paying taxes and renting/buying a home in Switerland, you’re already supporting the area where you live.

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Home-bias isn’t bad in general, there is a good Vanguard paper about this topic: https://www.google.com/url?sa=t&source=web&rct=j&url=https://personal.vanguard.com/pdf/icrrhb.pdf&ved=2ahUKEwjZpaz6pt3mAhVow8QBHYpbAMUQFjAAegQIBxAC&usg=AOvVaw1LVNfmJ04cas-BNKw4-4jB

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