Lets not get distracted with Details - lets focus on the basics. What precise calculation do you do to come down with your „overperformance“. Not focusing on the formula but the data.
Reason why I ask. Its a strange approach but technically, you could have a look at the fund holdings on date A, have a look at all distributions, interests and fees since and based on this calculate both how the Portfolio would have had evolved both with and without re-balancing.
But to be honest, we already know the answer from various empirical examples and the Portfolio-visualizer backtest someone else posted above. We only do this to see where the calculation mistake comes from and what a real re-balancing premium was.
Finpension takes this risk. Actually, for Finpension the risk is smaller as they only use funds domiciled in Switzerland. Viac as well uses IE based ETF and at least on them, I am fairly sure the WHT Credit will only come later on.
Which withholding tax credit? Ireland doesn’t have withholding tax, and ETF investors can’t get back level 1 withholding tax, be it a pension fund or not.
Your screenshot is very interesting. I cannot get the same level of details, as when I try to look at that transaction that day, there is no link to any document in my account… strange.
But, I found out that the amount of CHF 15.03 is the net dividend the fund paid out. This means, after already withholding the 35% tax. From a rapid google translate “Ausschüttung” means “Distribution”. So the fund distributed CHF 15.03 per part on the 11th of May. Again, this is net after tax.
So either:
VIAC cannot claim back withholding tax
The fund’s distribution is net, but since it is a restricted 2nd/3rd pilar fund, it doesn’t pay taxes itself, so net would be equivalent to gross
In fact, I have never seen VIAC refund me withholding tax. Does anybody have such transactions?
No, CHF 15.03 has been “paid out” (it’s an accumulating fund so it doesn’t pay dividends), and CHF 9.11 is the taxes withheld when this has been “paid out”. That’s also what I get roughly when I look at the semi-annual report dividing the amount of “delivery withholding tax” by the number of units.
So on 11.05.2023 they paid out CHF 9.11 withholding tax.
Yes I do, that’s an actual transaction from one of my portfolios.
But the fund can and does reclaim level 1 withholding taxes. At least the funds of the investment foundation I work at do this. They don’t reimburse them to the end investor, but the NAV is adjusted accordingly, however it seems that VIAC reimburses them to the end investor instead.
Sometimes it takes years until they get credited once claimed, just recently we received reclaims from 2017 from Spain…
Sorry, I am really not clear with this. What you received, the “distribution” of the fund, is actually withholding tax?
Mathematically, you own 0.606 parts of the fund, which distributed CHF 15.03 per part, hence 0.606 x CHF 15.03 = CHF 9.11. That’s what you received; but why would the fund distribute withholding tax?
Yes, the statement says “Rückerstattung Qurllensteuer”, which translates to “Refund of Withholding Tax”.
That’s up to the fund, either they keep it in the fund and the NAV is adjusted accordingly (what most funds do) or they distribute it to the client. Either way, it’s your money.
No, this is about Swiss withholding taxes (Verrechnungssteuer) of an ordinary Swiss mutual fund. As far as I can tell, this is not a special pension fund or share class and thus, the 35% of the dividends have to be withheld, they can’t just be kept in the fund. People that hold this fund at a regular broker, or via a wealth manager, get the 35% back as part of the ordinary tax process.
I don’t know the details of how 3a providers such as VIAC get Swiss withholding taxes back on your behalf, however, based on the timing, I would guess that the fund is allowed to distribute the 35% directly as it can verify that the holder of these shares is a 3a provider. For ETFs I would guess that it has to go via tax authorities and thus, might take more time.
No, this is about Level 1 withholding tax, the example I posted was just coincidentally a fund that invests in Swiss companies (SMI).
I have another one (Emerging Markets), where the dividend paid out was CHF 19.20 and the WHT reimbursement was CHF 3.43, so it’s clearly not level 2 Swiss WHT (Verrechnungssteuer).
Edit: Misunderstanding from my side
In the SMI fund example it’s definitely about Swiss VSt. of the fund dividend. Check ICTax for the fund. It’s an accumulating fund with a CHF 42.929 gross dividend on 9.5.2023 and VSt. is applicable. 35% of CHF 42.929 is CHF 15.03, which matches the credit.
You can hold that fund also outside 3a, so the fund is definitely not allowed to just add/keep the Swiss VSt. in the fund. And if you hold that fund outside 3a, you would get the Swiss VSt. back as usual by filling out the regular tax forms. I.e., unlike Level 1 withholding taxes, a regular taxable fund share holder can get that money back.
For CSIF EM I see a gross dividend of CHF 54.865 (ICTax) and I got a credit of CHF 19.20 at VIAC, which is again 35%. Do you have a screenshot of the CHF 3.43?
Indeed, you are right. I somehow completely misinterpreted the statements from VIAC. I also have the CHF 19.20 for the emerging markets, the CHF 3.43 are just the proportional amount for the number of shares I hold in this portfolio.
50/50 Stocks & Bonds: '86 to '22: +0.37%
This still includes the Goldilocks Period and sad premium implies a very small premium in the time from '10 to '22. Source: Same reddit link than above
50/50 US Stocks & Gold: '71 to '23 +0.33%
Source: @logitacher post above
50/50 US Stocks & Int. Stocks: '86 to '23: -0.34%
Source: @logitacher post above
Based on this, I still stick to my intuition that a sensible assumption for a re-balancing premium was in the range of 0.1% to 0.3%. This however ONLY if we use truly un-correlated assets. With regard to your claim that this was 3.92% to 4.02%, this is simply wrong and there must be a calculation mistake.
When I see how you calculated this:
and here where you even yourself admit a potential source of errors:
we all know what the problem is. Your calculation & claim that there was such a massive re-balancing premium.
Unless you provide us (sanitized / anonymized) data points that allow for validation calculation; I will mentally file this thread as “fake news” and keep working with my assumption that current re-balancing premium was in the range of 0.1% to 0.3% and that it (particularely if choosing too short re-balancing intervalls or in cyclic downward trends) could even be negative. Unless you can provide any data that we can work with - please don’t expect any additional response from my side.
Don’t get me wrong, re-balancing premium exist. There is a reason why I on a monthly basis re-balance my VIAC. The premium is however just not as big as you claim and to be honest, monthly re-balancing is a good idea even if there was no re-balancing premium and I am not sure / question if my monthly re-balacing generates any additional value vs. VIAC’s default re-balancing
You must be dense, I’ve provided five outside links that all show that your intuition about 0.3\% outperformance is off by an order of magnitude.
With the next quarterly numbers I’ll further decompose the CAGR into how much dividends contributed (it will likely be below 1\%, yields aren’t exactly high atm)
Meanwhile I recommend you stop reading this thread and disable all notifications for it.
If I cannot convince minds with academic studies then that’s because his mind is already made up and no amount of Google Docs or other time series will change this.
Sorry, but this is such a lame answer - either you achieved the results you brag about and can prove it or you didn’t. Academic studies have nothing to do with anything here…
If I had remaining 3A investment capacity, I would simply create two Finpension Portfolios:
Forced Monthly Re-Balancing: By flipping 1% of CS Money Market from CSIMF Money Market CHF ZB to UBS (CH) Money Market Fund, and reverse
No Re-Balancing: By de-activating the re-balancing option; or maybee better just re-balancing once per Year to remove the luck factor of the start date
Based on such two portfolios, and no additional investment into these - we could relatively fast capture the re-balancing premium that we as Swiss 3A investors could capture. That would be interesting but given I already have a comparable setup to 1) ready and can guess what the performance of 2 would be given individual assets’ returns; the answer is already quite clear.
YET: If anyone wanted to run this experiment for the community, that would be highly appreciated. As said, I already fully paid my 7k for 2023…
We’re a data loving community, we can usually be convinced by numbers. We’re also hard to convince when numbers are thrown out but the data behind them isn’t shared. That’s what gives credit to academic studies: they share their methodology and make their data available so people can get convinced by walking through the process themselves. We can’t walk through the processs, here.
Not giving us access to your (anonymized) data but only reluctantly giving us pieces of your methodology casts a doubt about the results you display and makes your process hard to trust. Your results may be right, heck, we may just be arguing about what a 4% returns applies to (some might understand 4% better than the account with less rebalancing while some might understand +4% CAGR) but we can’t give them credit if you dodge sharing your numbers and methodology in a comprehensive way.
Edit: also, the poll’s options are biased and don’t allow for any position that doesn’t agree with your premises (the “no” option is actually “it’s nice” with the “no” qualified by, paraphrasing: “I’m going to follow my emotions by not considering it” (as opposed to having a legitimate reason to doubt the efficiency of doing what you are doing)). That doesn’t build trust either.
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