And again meanwhile, or 4 months later, weighted avg YTM of CSBGC3 has increased to 1.36% (weighted avg coupon at 2.41%), so I still have this one on my radar…
But there is something else I would like to understand: why is the price of this particular ETF falling sind around mid of 2014? Can it simply be resumed to the fact that since then Switzerland has entered 0 or negative interest rates?
That chart is taken from their official and latest fact sheet dated December 2022.
I thought that when interest rates fall bond price should rise and the other way round… So I don’t really understand what is happening to this particular ETF. Maybe a Swiss thing or there is something else “wrong” with this ETF I am missing?
Well, on a global scale you should be glad that the yields on short term Swiss bonds is only 1.36%. The whole complex of problems in 2022 have moved them from -0.75% to where they are now, and I don’t know what else should happen for these yields to go one more % up.
I agree here and one can not simply compare 1-3y Swiss government bonds with 1-3y US treasury bonds. So yes indeed 1.36% is already very good compare to what we saw in the past years.
I dont think thats accurate. In this case the bond etf price changed only because of the interest changes of the SNB.
The weighted avg coupon (which is anyway totally irrelevant) is higher, as new bonds coming into the etf, have a higher coupon and weight more, due to the higher face value.
As now Switzerland 1 year bond has 1.5% yield, and I have piled some cash I would like to park part of my cash for a short period there.
How can I buy them? I have not experience buying any kind of bonds.
Thanks
I have +100K CHF.
I have Interactive Broker, but I am open to use another broker if fees are much lower.
I think it would be a good idea to buy 1 year CHF bonds like every month 10K. So parking that money in bonds and distributing it on time, I would get an average yield (maybe it will go up or down, who knows) and after a year when the money in bonds are getting free, monthly I will be able to reinvest in bonds again or in stocks if the market is crashing and good opportunities appear.
first of all, i’m not aware of actually getting 1.5% for a year with an ultra-safe inv vehicle in chf. here you can see the publicly available ch gov bonds and the shortest duration available offers slightly more than 1% (longest ones are at ~1.4%). you get basically the same yield with a fixed deposit (usually starting at 100k and from 1 to 12 months) with lots of banks. of course you could go with corp bonds for higher yields, but the higher the yields, the higher the (credit) risk. also, i believe ibkr doesn’t offer access to ch bonds.
I got the idea of 1.54% yield for 1-year CH bond from Switzerland Government Bonds - Investing.com, but maybe I am mistaken.
Do you know any list of corp bonds with high yield/risk in CHF?
Which is a good broker to buy Swiss bonds or Swiss corp bonds?
yep, i also follow a gov bonds site which shows the yield curve/expectations, yields per maturity etc, there’s several aspects that affect actual ‘investable’ instruments.
if you go to ‘all bonds’ on the link i sent before or click following link, you’ll see all ch bonds and can sort it by yield, duration etc. please note that the yield is not always totally accurate, it’s often slightly lower as the actual buy price will determine your yield, so go with the current ask price (just click for the bond’s details).
there’s also tax efficiency to consider. in short, coupon (being taxed) should be lower than yield.
personally, i use swissquote. please note that a) there’s the ch stamp tax (0.075% for buying / and selling, if not held to maturity) if using a ch broker and b) i use flat fee trades (20 transactions for 39.- each within 12 months) and it might make little sense to trade individual bonds with too small amounts. a positive vs a fixed deposit is the flexibility to sell in case of an emergency.
Does Swiss national Bank issue any debt instruments, actually? I think not.
Why should Swiss confederation issue debt instruments to satisfy investors’ needs? No thank you, I prefer current system where our state budget is not excessively in debt and the bonds are issued only occasionally and mostly for specific projects. And not that the new debt is used to repay old debts, forever.
Sure, I just don’t understand why banks get access to higher rates than retail customers.
There’s a huge spread between rates accessible to banks and rates accessible to retail investors in Switzerland that does not exist to this extent in the US.
I guess the way to limit debt is to issue less debt, but access to debt should be equal for retail customers, unless we want to subsidize our banking system.
I like the auction system of the US where everyone has access to.
I don’t think there’s many countries where people have access to the primary market (I assume it’s a bit of a pain for treasuries to deal with it, and it’s not their primary job vs. making sure their debt emissions are selling), and it shouldn’t be an issue since retail have access to secondary markets.
The main issue for me is the high fee of swiss brokers/banking/exchanges, which is probably due to the size of the market and lack of competition.
(If you could buy 10k worth of confederation bonds, or pfandbrief on SIX for 1-2 CHF, it would be worth it, but currently you’re more likely to have to pay 100x that in fees)
You can trade Bundesobligationen (Federal Bonds) of various durations on SQ. The yield curve is fairly flat and YTM are around 1.3%. If you hold to maturity (no exit fee), but 50k worth and use fix trades it will cost you about 0.3% incl stamp duty to buy.
But you may as well go for a Kantonalbank bond and lock in 1.8% with a nominal amount of extra credit risk.
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