It’s not so heavily weighted in the index. I’d be rather much more worried about the 60% or so weight given to Nestle Novartis Roche trio in it
for the nestle-roch-novartis problem, make sure you are aware of the difference between SLI, SPI and SMI.
SLI has the 9% cap which fixes the 60%-problem to some degree. SPI MID circumvents the problem entirely by not including the swiss blue chips, which are in turn contained in any all-world-ETF like Vanguard FTSE all world.
back to topic:
besides what grog mentiones, the swiss real estate funds tend to have 1+% TER 
2 Likes
Hi,
In my experience having an ETF with accumulating dividends or distributing dividends does not make any difference as they will be anyway taxed with a 35% tax, the difference is that in the first case you will not even see the money in your pocket, which makes it even more annoying.
Indeed if there are ETFs without dividends ( I do not know any ) or with low dividends, in order for the extra money to be reinvested in the capital, I agree that is a better option as it would be taxed less.
In general REITs are more for people who want to get some earnings from their investments along the way, so that they can get some returns in their pockets.
Please let me know if my understandings is correct.
Cheers
Al
Hi Mustachians,
For a while I’ve been toying with the idea to buy some Real Estate ETFs.
And I would like to use a Swiss Broker using Swiss domiciled ETFs to do this.
The objective of this non very Mustachian idea would be diversification.
Both in terms of where I keep my investments (I don’t want to keep all my assets in one place, read IB) and also in terms of portfolio allocation (would like to have something different from VT).
It wouldn’t be a high amount of my assets, something like 5-10%.
I also would like to clarify that I don’t own any properties and I’m not planning to buy any.
I’m aware of the higher costs of Swiss brokers, the high TER of these ETFs, the taxation on dividends, etc. but I still think it would be better than having some money parked in a savings account not invested - Or maybe not? Am I out of my mind?
I’d appreciate your thoughts on this.
Some examples I found of Swiss Real Estate ETFs:
CS Real Estate Fund Green Property
CS Real Estate Fund Living Plus
CSIF (CH) I Real Estate Switzerland Blue ZB
UBS ETF (CH) SXI Real Estate® Funds (CHF) A-dis
UBS ETF (CH) SXI Real Estate® (CHF) A-dis
(not done much research yet)
The first 2 are not ETF but 2 of the 40 available funds on Zürich exchange. They own buildings.
I don’t think these ETFs are good, because of the high fees. I think it is better to buy funds that suits your needs (taxed on the investor side vs taxed on the fund side, residential vs mix vs commercial etc). What’s more, some of the funds included in the ETFs are traded at a premium up to 45% (imagine buying a building that experts said has a value of 1.3M and has a mortgage of 300k, but you buy the package for 1.45M…). Of course if you want to choose your funds, there is 40 annual reports to read (unless you already know you only want residential only or any other criteria)
3 Likes
I have some shares of UBS ETF (CH) SXI Real Estate® Funds at Cornèrtrader based on similar thoughts. I’m also renting and it’s a much smaller part of my portfolio than stocks. I.e. it’s also for diversification and in a way a hedge against increasing rent (or in case I want to buy my own home at some point after all). While there may be some correlation with the global stock market, I expect it to increase diversification (also with regards to currency).
They are definitely not particularly cheap, although the premium was not quite as high when I bought most of them. Houses are also very expensive on the open market right now (may be higher than an official estimate), i.e. this is not purely an ETF premium.
The ETF TER includes the management costs of the individual REITs. The ETF management fee alone is 0.25%. Directly buying the underlying REITs would save you these 0.25% but you either get less diversification (and have to carefully study which one you want) or you need to buy multiple REITs yourself.
The tax value is 40% below the market value and part of the distribution is tax-free (capital gain distribution). The former means that you save a bit on your wealth taxes, which compensates the ETF fees a bit, depending on your wealth and tax residence.
BTW: The CSIF one is a mutual index fund, not an ETF. This fund is available at VIAC and finpension for pillar 3a. It might be available at Swissquote, although not sure whether it’s available to private investors at all. If it is, it might be better than the UBS ETF.
3 Likes
I have asked IB to make a CSIF Small&Mid cap fund (CSS1) available and they did so in no time. Just in case.
4 Likes
I wonder if anyone can share his/her experience in investing fund that tracks the SXI Real Estate® index?
There is actually a whole family for Real Estate indices provided by SIX Real Estate Indices | SIX and each of them probably have Total Return and Price option. For each index there is probably multiple index fund tracking the fund. SIX also provides a file listing our some productions if one invests in the index. https://www.six-group.com/dam/download/market-data/indices/six-index-based-products-en.pdf So basically there is quite a lot of research to be done, but I guess all these options are pretty much the same?
So if you are now investing in one fund tracking one swiss real estate index, which fund is it, which index is it? How did you choose this? Size? Age? Available or not on IBKR?
1 Like
A reduced tax value is calculated by the fund and the investor pays wealth tax on it. All elements related to the properties are not taxable.
The fund “Solvalor” is a good example (CH0002785456). The NAV at year end was approx. CHF 270, while the tax value is zero.
1 Like
Most of the funds were created after the real estate crisis of the 90’s. Only twelve were created before
Glad to find this post. Yet I am still a bit confused and/or lost in the selecting process. Would you have some direct recommendation of some funds that tracks the real estate index? And hopefully it is tradable on IB. Thank you so much.
As far as I know, the only ETF tracking the SXI Real Estate Funds Broad index is the UBS ETF SXI Real Estate Funds: CH0105994401. This should be available on IBKR.
There are also mutual index funds tracking the same index. Swisscanto (CH) Index Real Estate Fund Switzerland indirect FA CHF seems to be available to retail investors at Swissquote but I don’t think IBKR offers Swiss mutual funds. CSIF also has one but it is only available to qualified investors (and e.g. via VIAC/finpension).
1 Like
Regarding these tax advantaged RE funds. Do I understand correctly then that the"direct holding" funds are taxed, just on the fund side rather than the investor side?
If so, what’s the rate of tax applied?
If it’s higher than my marginal income/wealth tax then i guess it’s not actually advantageous.
On the other hand if it’s lower then it could be interesting.
Does anyone have more info how this works?
1 Like
4.25% for federal tax (art. 49 al. 2 + art. 71 LIFD) + cantonal/communal tax. The total tax is approx. 15%
Something to note here is that for businesses, tax payments are deductible expenses, so the effective tax rate will be lower than the sticker rate.
Is anybody investing in REIT funds in Switzerland? If so, what are your thoughts and if you want to share, for which funds did you settle and why?
Are they not dividends oriented companies ?
If you are in a capitalisation phase, it will be suboptimal as it will be highly taxed.
The tax value and taxable dividends are reduced for Swiss Real Estate funds (as the funds pay some taxes themselves). For funds tracking the SXI Real Estate Funds Broad index, the reduction is about 40%, if I remember correctly. It may be different for individual Real Estate funds, I’m not familiar with the details.