In the past month I discovered the world of bogleheads and mustachians, thus realizing that low cost US index funds are something I want to invest in.
14 years ago my parents bought me funds at Migros Bank tracking Swiss and Liechtenstein companies in CHF. They did okā¦ although they underperformed VT.
The thing that makes me want to move my funds away from MB is the high TER ~1.26%, the withdrawal penalty 5% and the low diversification.
Currently im building up a portfolio on IB where I invest in VTI/VXUS - 80/20.
The problem is that if I reinvest the funds, Iāll loose up to 5%!!! Maybe thatās not that bad since its YTD is currently 2% and VTIās is -12%ā¦
Now my question to you guys is. What would you do?
I would take the money out despite the penalty. The lower TER of passive ETFs will compensate a 5% penalty after 4 years or so, assuming the Migros fund doesnāt outperform index investment. If you stay invested for many years, I wouldnāt want to pay such high fees every year. It adds up.
You could take a look at the fact sheet and compare the fund performance with the benchmark. I donāt know which fund you have but e.g. āMigros Bank (Lux) Fonds SwissStock Aā underperformed the benchmark by 2.12% p.a. in the last 5 years and by 1.90% p.a. in the last 10 years. I.e. the difference has been significantly higher than the TER.
Has the 5% fee been stated/confirmed by the bank? In the KIID of the above fund I see a maximum fee of āonlyā 2% (RĆ¼cknahmekommission). I.e. maybe the fee is not even that high.
You could consider reinvesting part of it in an SPI ETF (iShares Core SPI) in addition to VTI/VXUS to balance your US bias in the current VTI/VXUS allocation a bit. However, thatās a separate question.
Your current allocation has a US bias, which is fine if thatās what you want, of course, however, it should be a conscious decision.
While listed Swiss companies are generally global companies, Iād still expect a bit more correlation between SPI and the Swiss economy/currency compared to e.g. VTI. I want that bit of extra correlation in my portfolio, which is why 20% of my stock allocation is in Swiss stocks (mix of SMI and SPI Mid/Extra). Whether you want that as well or not is up to you, of course. There is nothing wrong with a stock portfolio without home bias.
My current plan is to invest in a 70/30 allocation and slowly over the years switch to a more VT-like allocation. I read somewhere in a boglehead forum that VXUS acts as a dollar hedge. I must admit Iām not fully aware on how it works but wouldnāt that be enough of a measure against currency fluctuation? I guess itās up to me to assess that.
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