My bad, it has VWRL from three different exchanges (in EUR, GBP & CHF).
Now all of them are IE based, so is that bad or not?
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Apparently it’s actually five of them on DeGiro, not three (but not all of them have VWRL in the name):
It depends.
For Switzeland, the most cost effective and tax effective solution is to invest in US-based funds due to generally lower trading costs and available tax trieties.
If you are in the EU, then you have no other choice as EU made it impossible to buy US-based ETFs.
The VWRL on EAM exchange is comission-free to purchase once a month in Degiro so it is the best choice to start with if you want to stay with Degiro.
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SWX: traded in CHF in Zurich
EAM: traded in EUR in Amsterdam
LSE (VWRD): traded in USD in London
LSE (VWRL): traded in GBP in London
XET: traded in EUR in Frankfurt
You need to choose the currency that you have.
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Degiro charges 2.50/year for connection to EAM
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To be honest I work with a quite similar portfolio but mostly from Vanguard.
The difference is that I have a position in Japan which is an important capitalisation by itself.
For me, the 0 contribution to 3rd pillar is a good solution due to your young age, the high fees of third pillar and the fact that capital gain is not taxed in Switzerland but is taxed when you take out your third pillar.
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Really? I know that there is this withdrawal tax, which is like 5-10%. Is there really a regular capital gains tax on top of it?
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The withdrawal tax is 5% to 15% according to amount and canton but there is no capital gain on regular investment. A good part of the gain of a third pillar portfolio comes from capital gain and you will pay the 15% withdrawal tax on it while in your regular portfolio it is tax free.
You have to be honest, the third pillar helps more the bank than the small investor. This sector of the market is not exposed to the competition of foreign bank institution.
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OK, but I checked, and if I purchased any 3a pillar in 2018, my taxes would have been lower by 2350 CHF. I was thinking about finally buying VIAC this year, when they roll out the web access. When you invest in a 3a pillar, then all your dividends are income tax free and reinvested automatically. This can offset the 0.5% annual fee. So you have this initial 33% saving bundled with a final 15% withdrawal tax. So you’re better off investing in it either way, or?
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IMO this 3a thing must be split into 2 separate (orthogonal) concerns:
- tax savings when paying into 3a
- how/whether to invest once the money is in 3a or if it’s better to invest outside 3a
So regarding 1.: I think that’s dependent on each person’s tax situation but obviously in many cases there are huge gains to be achieved - as you pointed out in your 2350.- example. So if you’re fine with this money being locked until you retire, build a house or leave Switzerland then that’s a great idea.
Regarding 2.: I just did a calculation yesterday here for a sample situation and the result for those numbers where: investing in 3a mutual funds/etfs has a tax advantage of 0.2% vs investing outside 3a in etfs. So, based on the chosen example numbers at least, dividend gain does not offset 0.5%, only 0.2%.
With that in mind (and yes, everybody’s numbers are slightly different, so everybody must calculate this themselves) I conclude: it is better to (a) pay into 3a to get the tax benefit but (b) keep just cash there and instead invest with what’s still outside of 3a. That is, for the amount of cash I want to keep as cash based on an overall (3a + outside-3a) portfolio view. So really, look at how much you want to invest in total, how much have emergency cash. Then keep a very minimalistic amount of cash outside of 3a (eg 5000) but invest everything else outside of 3a. If you want more emergency cash, keep that non-invested in 3a. And in case of an emergency do the investment-jugggle-trick I mentioned in the other thread
VIAC is the answer. You can create several portfolio which is key when withdrawing them in the future, as the withdrawal tax increases with the amount, better to have 5x30KCHF than 1x150KCHF. This was suggested by my Tax advisor too.
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Quick thoughts:
That‘s two thirds (65%) allocated to one single country, the US, which only represents a 330 Mio. population. Sure, it‘s the biggest country in terms of GDP and market capitalisation, and (especially it large-cap) companies might operate globally. It‘s still a lot.
More baffling to me is the of MSCI Pacific ex-Japan, to be honest: Two-thirds of it (65%) are made up of Australia and Singapore alone. So these two countries represent 2/3 * 15% = 10% of your entire portfolio. To quickly it into perspective, in rough numbers:
- Australia & Singapore: 30 mio. population, 1.7 trillion $ GDP = 10% of your portfolio
- Japan (as already mentioned): 126 mio. population, 5 trillion $ GDP = zero % of your portfolio
What about Europe?
- Eurozone: 315 mio. population, 13 trillion $ GDP = 10% of your portfolio
…and then, the EuroStoxx only comprises Eurozone countries, so there‘s the total (if we aren’t getting into technicalities of Unilever) lack of the United Kingdom:
- United Kingdom: 66 mio. population, 2.9 trillion $ GDP = zero % of your portfolio
What about China? The mainland constitutes app. one third of MSCI Emerging Markets, and Hong Kong one third of MSCI pacific:
- China: 1400 mio. population, 13.5 trillion $ GDP = 8% of your portfolio
There might be reasons to do this, but it certainly seems a disproportionately high, even huge bet on Australia and Singapore, compared to other markets.
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I would like to highlight that GDP is not linked to market capitalization.
I like the idea to avoid Japan, however, I agree that 15% in Asia Pacific is too much.
Maybe it would be easier to simply buy an ACWI or FTSE all world ETF (VT from Vanguard)
I would also advise US-based ETF to reduce the withholding tax.
AMUNDI MSCI EM DR could be replaced with the Ishare fund with a TER of 0.18%
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Also GDP inscrease is not correlate to market performances
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Didn‘t claim they were 
(though your points are very valid!)
It was just to give some perspective. I think it is not necessarily „right“ or „optimal“ to (geographically) allocate investments purely on the basis of market capitalization. Unless, of course, you strive for a portfolio performance that just most closely tracks the world investable market based on weighted market capitalization. Though that’s probably far from the worst of approaches, there might be more preferable ones.
GDP or population might be among the important factor‘s I would at least consider, too (from a growth perspective, for instance).
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Different markets will different structures and ownership of corporations. The U.S. should undoubtedly have a much a higher percentage of publicly held and stock exchange listed companies than other countries.
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There will be „local“ companies. Not even every S&P 500 company will be highly globalized, or all of them to the same degree. Despite many big corporations‘ businesses being international, there will still be index-listed companies with disproportionately high shares of domestic revenues and earnings (From the top 25 constituents of S&P 500, Bank of America, Verizon, UnitedHealth, Home Depot and Wells Fargo would be among my suspects, without even researching).
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The U.S. is just one jurisdiction, with its particular business and tax „climate“ and associated risks and opportunities. With more than 50% of worldwide market capitalization, it does present a cluster risk.
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Just wanted to update (myself and everyone) a bit on this, and open a discussion whether it makes sense to keep doing what I planned, long term (15 years).
According to this article on Forbes, US today (or, end of Q1 2018) amounts for only 36.3% of global market cap!
Now I had an idea of my “basic” portfolio to be something like 50-40-10 split between US-DevxUS-EM.
Yet today, as I am starting to build my own IPS, I felt like questioning my decision and plan. 
What is your take on this, and growing China (and other emerging) markets?
Do you still stick to your ~50% US allocations; or with VT even putting it up to 58%?
I know, on the other hand, that companies domiciled in a country don’t only do business (and make profits, and thus grow) in that same country; example all US companies, and even for CH Novartis/Roche/Nestle.
So I am a bit shaken now as to how to approach my “optimal” distributions.
Happy to read your inputs!
Cheers,
D
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The missing % in other counties are hard for an ETF to invest into. I’m not sure if you can just substitute the missing companies with other companies from the country or the region. I just hope that along with the development of other countries, their stock exchanges will become easier to access for foreign investors, and will get added to ETFs.
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Fair point, it would be interesting to dig deeper, and see which exact (large cap) companies of those countries are inaccessible via ETFs.
I just find it still quite disproportionate, with VT having for example:
- US @ 54% vs. 36%
- HK @ 1% vs. 7%
- CH @ 3% vs. 9.5%
But again, pure market cap is probably not the only criteria to go for.
Thanks for opening my eyes a bit further.
One other thing to consider is market cap vs. investable market cap. For example, Saudi Aramco is the worlds biggest company, but you cannot invest in it¹. Does that mean you should plow money into random Saudi companies to compensate for this?
¹ Yes, I know, for a few years now the Saudi regime has been indicating that they might IPO a small % of the company so this may change…
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I swear you will outperform most portfolio managers if you stick to this strategy. I would find accumulating version of the ETFs you listed. You could also decrease equally your exposure to the US and Pacific ex Japan to get some exposure to Japan (between 0 and 5%) and increase your exposure to China by investing in a China specific ETF
This is an excellent view on that portfolio, thanks for sharing it