i recently bought shares of vanguard ETFs, and for $ 700 worth of shares i paid $ 0.36 in commissions.
What does “not very pretty mean”? Do you worry about liquidity? About not being able to find a buyer or a seller at a given moment? If that’s the case, then I don’t care because I buy to hold. Or are there other risks involved?
If you wanted a mutual fund then I guess you could go to Vanguard UK (or do they also only take British residents?). But they have an annual account fee of 375 GBP 
About estate tax: If I moved my Irish ETFs to IB, they would not be subject to estate tax, right? The broker doesn’t matter, only the domicile of the asset? Do you know anybody who was dealing with estate tax and is it really no problem?
About SIPC and stock ownership: What happens if IB goes bust? Are you definitely covered by SIPC? And even if you are, what if you have saved up more than 500’000? Why are securities by American brokers not owned by the customers? Is this not an issue for you?
Edit: Here is a nice article about unit creation of ETFs. So basically if the ETF wants to create 50’000 new units of the fund, it can order them by the market maker. The market maker then buys all the stocks and gives them to the ETF, receiving the 50’000 units of the fund. Then he can sell them at a profit. I don’t see any big risks here.
The main question is on which conditions the market market will created shares. I don’t think that trading 100 to 1000 shares on an illiquid etf will triggered the share creation
Estate tax is not an issue
Spic or not spic. Nobody is able to clearly answer to this question. Even the info from IB is not alligned
According to the article I linked, the market maker trades with the ETF at NAV price. ETF creates new units in large batches, like 50’000 units (I guess in order to be able to replicate the index properly). The market maker can then sell these units at a premium, this is how they make money. So the buyers and sellers are paying with the spread for the creation and destruction of the units. In an index fund, this cost is covered by the fund, so it is included in the TER.
Care to elaborate? I cannot ignore this issue just because a guy on the Internet said so. 
My personal experience was with SWDA, it spots $11B AUM, but traded rather thinly for that figure, e.g. today only ~35 trades, and there’s a good amount of spread last time I tried to sell it
Now I’m only going for the biggest and most liquid funds. VTI is traded much much more heavily.
I don’t think it’s specific to american brokers. Buy some AAPL at a swiss broker and I’m pretty sure it’s going to be your swiss broker’s name too on the books of Depository Trust Company - the central US stock depository. It’s just how today’s electronic trading works. It’s probably similar in some other countries, but these things are not really my area of expertise.
In US at least an alternative you can elect for is “Direct Registration System”, where your stock ownership is recorded directly with the stock’s issuer. If issuer goes belly up, the chances are his stock’s most likely a zero too, so there should be little extra risk here. But trading is a hassle, whenever you want to trade you’ll need to transfer shares back to the broker.
We discussed the issue of estate tax already in another thread: The $60'000 cap for US investments
I don’t know who imposed or chosen 50’000. But I think, it would be different with each provider and also on the index liquidity .
Let’s take an exemple: Lyxor MSCI China A Fortune SG (DR) UCITS ETF (FR0011720911)
The fund has 51.5 millions euros. If the market maker creates 50’000 shares, it would be 50000*124.34=6’217’000
More than 12% of the fund value.
Well, I checked the typical daily trading volume of a few ETFs:
- VTI: $1 million - $3 million
- VT: $300k - $1 million
- SPY: $50 million - $60 million
- VUSA CHF: 10k - 50k shares
- VEUR CHF: 0 - 4k shares
It looks like the difference between VT and VTI is not so big, not as big as the fund sizes would suggest. If you really care about liquidity, you should go for SPY. But then I guess it is the question of trusting SPDR or Vanguard.
Currently the SIX website shows a bid/ask spread of around 1% for VUSA and VEUR, but I think when I was buying them during the day, the spread was just a few rappen, for an asset that sometimes has no trades done in an entire day.
SPY is a very reasonable choice, one of the oldest and most established ETFs out there, but VTI has an edge over it in slightly lower fees (0.07% vs 0.10%) and mid/small cap coverage. VTI is also a share class in Vanguard’s corresponding mututal fund, which is roughly double the size of SPY ($596B vs $244B for SPY), don’t misjudge it just based on the size of VTI alone
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Do I understand it right: CT with stash < 100k; IB stash > 100k ? (Assumptions: mainly US domiciled ETFs; trading 1-2 times a year; investments 10kCHF/year; investing/rebalancing 1xyear with investment amount)
On a separate note: Does anyone consider Brexit issue in regards to IB (its headquarters, legislation, non-existing (exaggerating) future agreements with rest of Europe)? I read somewhere that some banks consider moving their headquarters to Europe / outside of UK due to Brexit. Of course the topic is more complex than that, but shouldn’t IB users residing in CH consider/anticipate the upcoming changes somehow?
Nope. IB with > 100k and IB with < 100k.
I don’t think it will be an issue for CH - they have different agreements with UK. If IB will move to EU, that wouldn’t change much, as CH has agreements with EU as well. I think CH is pretty much safe it this case. The problem is more related to Brits living in EU and EU-ers living in UK.
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IB is the cheapest outside Switzerland.
However, if you would like an account in Switzerland CT or Swissquote are good choices
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By the way, IB UK actually has offices in Zug and their helpdesk number is also a swiss one. Not that it matters, just a fun fact.
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I just opened an account at Cornertrader to serve as a backup to IB. I’m not too happy that it takes 3 days after making a transfer to IB for my cash to “settle”. That makes it very hard to quickly act on drops in share price, and if I keep lump sums in my IB account then I will incur negative interest. Also there is just something so user-unfriendly about the IB system and even though I do not think it will be too complex for my purposes, it certainly does not warm my cockles and I do not like the multiple separate interfaces or the mobile token login system either.
Sure Switzerland is more expensive to trade, CT costs approximately 40hf total in commission and stamp duty for a 15000 trade (Postfinance AG double that at around 80chf!) but there is something to be said for the comfort, ease and convenience of having your chickens roosting in your own back yard.
If only Postfinance AG would cut their rates down to Cornertrader levels I would stay with them for the lovely interface and the ability to instantaneously transfer cash between my main and trade accounts.
Choices, choices.
It doesn’t, you can trade as soon as the money is received by IB. CHF transfers to them done via SIC (“ch iban”) are cost efficient and very fast - I can wire the money from my cantonal bank account and have it available for trading within 2 hours and paying 0 in fees
You can always also trade on the margin. Interest rates are extremely low. In fact, if you transfer money with 2 or 3 business days it won’t even be charged, it’s only charged on settled balance
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Hmm ok. Then what does this message mean when I do my trade preview:
close
Warning
CASH AVAILABLE (SETTLED CASH): 0.00; CASH NEEDED FOR THIS ORDER AND OTHER PENDING ORDERS: XX’000.00
Can I just ignore it and be safe in the knowledge that I have the cash to trade?
Also on the next stage I get:
Preview Order
close
Order: BUY XX Stock @ 200.00 LMT DAY SMART USD Fill Outside Regular Trading Hour: No
Amount Commission Total Initial Margin Maintenance Margin Equity With Loan
XX,XXX USD NA NA 0 0 126
Why would it be mentioning an equity with loan?
Maybe you have a cash account with wrong currency, i.e. you forgot to convert currency
Upgrade to a margin account and you shouldn’t see such silly messages ever again (as long as you do have the funds of course)
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Ahhh crap that must be it, makes sense, my account is in chf. Thanks for pointing out the obvious, hedgehog.
Question: does it make any tangible difference trading on NASDAQ in USD to trading on SIX in CHF? I was trading on SIX in CHF before but IB doesn’t have many of the stocks I want to trade on SIX.
Shall I just stop worrying and go full NASDAQ? 
US exchanges are orders of magnitude cheaper than European, so yes I would advise to do all your shopping there if possible
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This only applies if you keep more than 100k CHF, which you shouldn’t anyway because it’s not covered by deposit protections.
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