The difference is because finanzen.net shows the current status (17.12.2020), while the one in your picture, given in the factsheet from finpension website, is the snapshot on 31.10.2020:
Hey, great job, quite helpful! I have a few questions though:
In 1) Country replication, why do SMI and SPI Extra indexes are not 100% Switzerland Shares (you use 94 + 6, but both should be 100% Swiss)? Did you try to add already some cap size on the country match criteria?
Same question for 3) Final replication (there you have 75+25)
What I did extra is to reiterate the numbers chosen to be entered in finpension and retrofit them into sheets 1 and 2, until I got a closer match on both Country and Size. I then end up with:
73% CSIF (CH) III Equity World ex CH Blue - Pension Fund ZB
09% CSIF (CH) III Equity World ex CH Small Cap Blue - Pension Fund DB
14% CSIF (CH) Equity Emerging Markets Blue DB
02% CSIF (CH) Equity Switzerland Large Cap Blue ZB
01% CSIF (CH) Equity Switzerland Small & Mid Cap ZB
Another thing: I wonder now if we should use the “Quality” version of the World ex CH fund, as it seems to pay-off despite the higher TER.
SMI + SPI Extra represents the Swiss stock market without overlap. So I tried to use the cap size based on morningstar.ch. I was expecting more something like 80% / 20%, but if I use the correct cap size value it’s 94/6.
Corrected now. It did not affect the formulas as they were linked directly to sheet 1).
Exactly it’s iterative. In the exemple I have currently on the sheet you see that by matching mid-cap, there is overall less US exposure, and over-representation of small caps. So by doing the iteration you arrive again at better US exposure (e.g. country match) and probably small-cap under-representation. I guess you have now under-exposure of mid-cap, as it is not possible to have a perfect match. That’s why sheet 2) is really useful to understand the match, e.g. the choices you have to make.
Fully agree, and VT should be the way to go for passive investing. For the moment I just replicate VT because I’m starting to invest only now in VT on IB. Maybe when I have a lot of VT in IB I might diversify a small part of the portfolio which could be the part in finpension, as this Quality fund is accessible only there and not on IB if I got it well (only for institutional investors).
Thanks for your work @Cortana and @TeaCup as well as the others above. One naive question, why would you disable rebalancing? The funds on finpension are in CHF. Doesn’t that mean, that there are no rebalancing costs occurring?
I guess the idea is that since it’s already cap weighted no rebalancing should be necessary. (Not sure if it’s true due to accumulated dividends that might make things diverge).
What I’m wondering is whether it makes sense to include anything with less than 5%, isn’t it overkill to replicate in that much detail? If it becomes a large fraction of the equity universe, you’d only miss a tiny bit anyway, right? (basically you’d miss that part growing from 2% to 5% so this is somewhat bounded).
Am I overlooking something? This would make it much simpler to just ignore SMI/SPI.
Because these fixed proportions are only true now. In 3 years MSCI Emerging Markets could be at 13% instead of 10% for example, so you don’t want Finpension to rebalance back to 10%. You let it be so it stays at market cap weights. You could also adjust these %-settings on a regular basis, but that’s too much work IMO.
As @wapiti pointed out, disabling rebalancing doesn’t work. What are the rebalancing bands of Finpension? Viac uses 2% absolute. If it’s the same at Finpension, I wouldn’t remove Switzerland. There won’t be a rebalancing with Swiss assets as there is no way that SMI could grow from 2% to 4% or SPI Extra from 1% to 3% to cause rebalancing problems.
“If the weighting of a fund deviates from the target weighting by more than one percentage point, your entire portfolio will be realigned.” https://finpension.ch/en/3a/faq/
The easiest would be to chose 99% MSCI World ex CH, but you miss small-cap and EM, otherwise you need to adjust on a regular basis. Each buy and sell has a cost of around 0.03% to 0.10% (displayed on the factsheet). Finpension like Viac use netting to reduce this cost.
“But before we do so, we check whether other customers within the finpension 3a Retirement Savings Foundation client base have orders to the contrary. In the end, we only trade what is necessary below the line. The rest is charged internally at the currently valid price. Fund units are moved from client X, who wishes to sell, to client Y, who wishes to buy the same fund units. Of course, this internal settlement, which is called netting, is fully automated.”
I would also recommend to take into account your whole assets. Because if 3a is 5% of your total asset, the impact of your 3a strategy will be small.
The quality fund contains only companies that have " historically high return on
equity, stable year-on-year growth, and a low leverage ratio"; the world ex ch fund is just a basket of companies with no consideration at all for growth, ROE, or debt of the individual companies in the fund. Performance chasing is a common mistake - if you are chosing the quality fund only based only on the fact that it outperformed the world fund since 2015, then thats the wrong reason; on the other hand if you are chosing the quality fund becuase you believe that companies with high ROI, conistent growth, and low debt will outperform the general world market over the long run, then that is a good reason to chose the quality fund. In my opinion it is unlikely that the world fund will ever outperform the quality fund over the long term; but that’s just my opinion and of course i could be wrong.
Sorry but im not sure exactly what you mean about always relative to the price - from my perspective I don’t invest in “stocks” I invest in “companies” - I dont care what the stock price is I only care about the company and where that company is going in the future - I am happy to pay up for high quality companies which I feel have a great future (unless of course the valuation is nonsense (i.e. i feel that the company will never grown into that valuation or at least it will take an unreasonable amount of time to grow into that valuation)
But with regards to your question there are many reasons why a company with the same profitability would be valued differently by the market (e.g. TAM). Many hyper growth companies are not profitable yet; but they have a huge valuation; because of their growth they are expected to growth into their valuation over time - and the market prices in this poteintilal (hence the high valuation).
But, forgive me becuase I am not fully clear on what all of this has to do with my previous post which related to the quality world fund v’s the ordinary world fund.
There is another post in the forum “If I was an index investor” that discusses Quality factor. Here is a link to an article I shared there which shares a theory why Quality stocks might outperform.
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