Procedure for switching broker (Strateo to IB)

Dear Mustachians

First of all thank you for all the valuable knowledge you’re sharing on this forum!

While reading this forum for the last couple of months, I realized that there is some potential to optimize my Investments:

Current Setup (approx. 150 k invested)

  • SDWA (53%)
  • EIMI (22%)
  • CHSPI (25%)

When I started investing back in 2017, my decisions were based on following thoughts and requirements:

  • EM / WORLD ETFs

    • Worldwide diversified ETF Portfolio (regions, currencies sectors etc.)
    • EM/World ratio 70/30 with ability to adjust ratio in future
    • IE based for tax optimization
  • CHSPI

    • 25% of portfolio in CHF (home bias)
    • High level of diversification within Swiss market
  • General requirements

    • Easy to handle (lazy) portfolio with low amount of positions
    • Sufficient fund size
    • Low fees

Currently I’m using Strateo as my broker which then was among the cheapest. My wife bought some Stocks and ETFs (approx. 2000 CHF) which I currently keep in my broker account as well:

  • Microsoft Stocks
  • MSCI ACWI Socially Responsible UCITS ETF (hedged to CHF)

I know the UBS ETF is crap, but it was important to my wife to have a sustainable (ESG) investment…

So right now, I’m thinking to switch to IB to cut down costs and further optimize for tax.

Target Setup:

  • VT
  • Some CHSPI for home bias
  • (+ my wife’s stocks)

May I kindly ask you for your thoughts and advices regarding the transition to IB:

  • What would be the steps to migrate from Strateo to IB?
  • Selling my Stocks now from Strateo to invest with IB with the current losses seems not reasonable to me at the moment
  • Maybe just keep Strateo, while start investing with IB. Then sell Strateo Stocks at a future date
  • Would it possible to transfer stocks which I want to keep (e.g. Microsoft, CHSPI) from Strateo to IB?
  • Is there a mustachian like alternative for the UBS ESG compliant ETF?
  • How long does it take to register and setup the IB account?

Greatly appreciate any advice or suggestion!

There are only two ways to transfer assets - sell and transfer cash, or don’t sell and transfer positions. Calculate the cost of each case and make the decision. But neither would be particularly cheap with swiss brokers, so if having multiple accounts doesn’t bother you might as well stay until you really want to sell the positions

Why? There’s no CGT in Switzerland, so if you can time your sell and buy trades to occur at the same time (buying the same stocks on IB immediately as you sell on your other broker, either on margin, or if you don’t have enough capital to pull it, spread out over multiple days), the difference is negligible. But it wouldn’t be cheap to sell at swiss brokers.

Dumb.

Even pretending ESG stands for anything other than a marketing buzzword, it’s rather far stretched that investing in shares on secondary market actually makes more than borderline difference to those companies.

I don’t understand the rationale behind home bias? What’s the point of overweighing Switzerland?

  • open now IB account (follow guide from @_MP or @MrRIP) registration is very quick, then i think i had to wait 12h until they opened it; first 3 months are free
  • 150000 x 0.53x 0.02 x 0.6 x 0.15 = kind of the amount you lose bc of us tax (ie vs us based)
  • you are gonna must sell your etfs at strateo at some point anyway, so no way around this cost
  • i think it might be possible to solve it all on the same day: sell all on strateo at market opening europe time -> send money -> money arrived at Ib -> buy on IB end of day usa time…but i would consider 1 or 2 extra days to be safe…usually it really does not make a difference selling - buying similar etf at 1 day interval , but right now market is so crazy…i would wait till cools down a bit…
  • socially responsible etfs are marketing trap…but the amount invested is low and psychological side must be considered
  • do not buy hedged stocks etf
  • SPI etf (or any swiss etf): 1) look at top 3 stocks and tell me again if you think it is well diversified 2) home bias is a very common mistake, see link below 3) with 2. (Pensionskasse) and 3. Pillar (3a) you are already forced to have home bias— it would be a mistake to buy more chf stocks.
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Thank you guys, appreciate sharing your thoughts. Ok, will rethink my (CHF) allocation. The thought behind was that I live and work in Switzerland, so I earn and consume in CHF. Other currencies are subject to a foreign currency risk, but apparently seems not to be relevant for investments…

Swiss large cap companies (>50% of your “swiss” etfs) make most of their revenues from abroad. Take Nestle for example - only a little bit above 1% of its revenue comes from Switzerland. Nominal CHF trading currency of their shares means nothing. They are still by far and large humongous, global, USD-dependant companies that just accidentally happened to be headquartered here for historical or tax reasons. I don’t think HQ location alone is a good reason to invest in them. They could just as well be an S&P 500 component instead.

Swiss small cap are more tightly connected to swiss economy, but also way more risky and small, harder to trade and less liquid, I wouldn’t buy them. Real estate is arguably the best way to get exposure to the swiss economy now.

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Well, firstly, it is a relevant risk, but home overweighing is also risky - think of people who were home biased in Japan since 1980s. And secondly, you can’t get away from that risk because most of the companies get their revenue in different currencies anyway.

Another thing is that overweighing is only one of the solutions to currency risk. The other ones that come to my mind is currency hedging (which also sucks atm because it’s too costly) and asset allocation (just keep more cash, or in normal times bonds, in your portfolio). I think in current market conditions the last one has the most sense - keep more CHF at bank and invest the rest into global or American market (depends on your taste).

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