What’s the ISIN? There’s an ESG one that’s supposed to track the gross index, but all the others are tracking the net index.
The others do also track the gross index. They changed it from net to gross in 2019. but the ESG one was launched from day 1 as gross because newer ETF.
Then they should update their information: https://etf.invesco.com/ch/institutional/en/product/invesco-sp-500-ucits-etf-dist/trading-information (also so far the data doesn’t show them outperforming the etfs with 15% withholding).
They do outperform if you compare from 2019 also in 2020 you can see the outperformance…
ETF Net Index
Dec 19 - Dec 20 17.60% 16.99% 0.52%
Vanguard and Ishares both outperform the net index only by 0.26% (15% Witholding Tax instead of 30%) so Invesco outperforms both by a big margin with 0.52%
I sorted S&P 500 ETFs by 3Y return on JustETF, and indeed the Swap based ones are on top.
The Invesco one is indeed the biggest, the Xtrackers one not far behind, which is also listed in CHF (I wonder what the “1C” means, though). How do you trade the Invesco one? You exchange the currency on IB?
They all indeed outperform Vanguard and iShares by at least 0.3% per year. Taxes have to be paid on both, just not sure how much. @San_Francisco provided a comparison from ICTax, which is somewhat puzzling. If I get it right, the Invesco one has a particularly high dividend?
Here MSCI World:
I’ve gotta say, I’m overwhelmed by the knowledge needed to grasp it.
- Physical Replication with Securities Lending does not seem optimal, but how does the risk compare to a
- Swap Based ETF. I can barely understand how a swap works, yet I should invest in it just on the premise that it does not pay withholding tax.
- Then there is Optimized Sampling (also usually with Securities Lending). I guess the really broad ETFs (e.g. All-World) use this in order not to have to hold 4000+ different companies’ stocks.
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Invesco has the big advantage vs BNP and DBX that the SWAP Basket has mostly S&P 500 stocks so it is actually a physical ETF with mostly US securities. In contrast to that BNP and DBX have just a very Limited number of US securities in the SWAP basket.
May I ask how did you learn about this stuff? You are so pro Invesco, you almost sound like their salesman. How do you check what is in their “swap basket” (whatever that is) and why should it matter to me? Also, if the basket is what it is today, how can be sure it will also be “good” tomorrow? Do I need to check it regularly?
It sounds tempting to invest in this ETF, but I would need to learn more about it and not just trust a guy on the internet. Especially that no other forum user seems to be excited by this (and many are more knowledgeable than me)
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You can see all SWAP Baskets on the ETF Providers websites…not only Invesco but also all others…well you don’t need to check them but for sure it is good to know that they hold mostly S&P 500 stocks in the basket. Well I was many years a structurer for ETFs and Structured Products and let’s put it that way I thought it was good to give you guys some insights about the structure of ETFs…I came across this forum as I was looking for something ETF related and this is why I started writing in this forum :)… Hope you don’t blame me not really being a Mustachian but I like the concept that people help each other…
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OK if that’s the case then I see how you’re so informed 
. So, given your experience, you really think the Invesco is the best UCITS product (regarding performance and safety)?
What do you even mean by this? I don’t know if I consider myself a mustachian. I’m just interested in early retirement and investing my money in a carefree way. May I ask what is your investment setup? Which of the Invesco ETFs do you hold (S&P 500 or MSCI World) and how much of your portfolio does it consist of? Which broker do you use and how do you go around the issue that the ETF is not traded in CHF?
And finally, since you know ETF business so well, why do you think we should stay away from US ETFs like VT, VTI?
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@Matchpoint Thanks for sharing. I assume you mean this MSCI World ETF (0.19% TER): Invesco MSCI World UCITS ETF | A0RGCS | IE00B60SX394
Given your knowledge, I would love to understand:
1/ Distributions are -by design- not feasible for such a synthetic etf and instead you would see a capital gains, right?
2/ ICTax lists this ETF (ICTax - Income & Capital Taxes) and shows an “Ertrag” of 1.661 CHF for 2019. Where is that coming from? I thought the ETF doesn’t hold any dividend-paying equities and thus can avoid any tax withholding?
(The same is actually true for the S&P 500 ETF from Invesco: ICTax - Income & Capital Taxes )
3/ Shouldn’t these ETFs be super interesting for folks that move to places without capital gains and dividend taxes? (Example: someone moving to Singapore, etc)
Yeah, that’s the one, SIX ticker MXWO. It’s based on MSCI World, so it only includes large+mid cap developed markets, but that’s OK.
There is no withholding tax. What ICTax is showing is taxable income. You put that on your tax declaration and pay regular income tax on it. Accumulating ETFs invest in stocks that pay dividend, they just reinvest it. Swiss tax office counts that as income, so in some magical way it calculates the “implicit” dividend that was never paid out to you, in order to stay fair to other investors.
One thing concerns me: let’s say my marginal tax rate is 40% and ICTax always calculates these incomes:
- for Vanguard 2.0%, so income tax will be 0.08% of the position
- for Invesco 2.5%, so income tax will be 0.10%
And there goes your advantage out the window. So I hope ICTax makes it correct, thus only 0.3% difference. Some real data:
ETF Year Income Value Ratio
VWRL 2018 1.217 73.55 1.65%
VWRL 2019 2.063 90.30 2.28%
VWRL 2020 1.451 94.00 1.54%
MXWO 2018 1.284 51.78 2.48%
MXWO 2019 1.661 65.79 2.52%
MXWO 2020 ?.??? 69.22 ?.??%
The taxable income for Invesco is significantly higher. So much so, that you’re worse off in the end. Or am I missing something?
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@Bojack MSCI and VWRL don’t follow the same indexes. To make a good comparison, you should take MSCI World ETFs . Anyway, the differences dividend differences are too high in your table.
I have tried to compare multiple ETFs with the ICTAX data (all currency is CHF). There are no major trends and now I have even more questions 
.
Few observations:
- IE00BK1PV551 distributes only once a year. This would potentially have an impact on the ratio
- I have some doubt about the return data from justETF
- Why so much differences ?
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@Matchpoint any chance that you can share some insights regarding the above-mentioned points? i would love to really grasp this.
You really need to compare the same indices and the Vanguard ETF tracks the FTSE all World Index That includes approx 10% EM whereas MSCI World is without EM. Having said that there should not be a difference between MSCI World ETFs on the dividend. The dividend can be easily looked at if you look at the index and I guess this is how the tax authorities come up with the dividend yield. For the return data I would only compare those synthetic ETFs that replicate the gross index which is Invesco and Amundi vs the Physical Ishares and Vanguard. Here there will be a higher payout for the synthetic as they do not hold back 15% US Witholding Tax. If you take Lyxor, DBX and some of the other synthetic providers there can be indeed a difference in the payout as the replicate the Net Index and agree with an investment bank on a swap term for 12months and meanwhile if the dividend yield changes you still will get what was agreed on the time the contract between the ETF and the Investment Bank was closed for the SWAP. So best is reall comparing those synthetic ETFs that follow the Hire Act871m rule which is the Invesco and Amundi ETF and compare that to the physical replicated ETFs. Btw on some of the platforms it can happen that there are some data errors.Maybe this is also the reason for divergence but this is another topic…
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I don’t see how the 10% emerging market could cause such a huge disproportion. But ok, let’s try with the iShares MSCI World accumulating.
ETF Year Income Value Ratio
MXWO 2018 1.284 51.78 2.48%
MXWO 2019 1.661 65.79 2.52%
MXWO 2020 ?.??? 69.22 ?.??%
IWDA 2018 1.037 48.49 2.14%
IWDA 2019 1.115 61.10 1.83%
IWDA 2020 0.982 64.85 1.51%
So for 2019 the difference was huge, 0.7%. Put 40% income tax on that, you got yourself a 0.3% loss. So not worth it, really, at least for that year. And for 2020 there is still no data, so if I wanted to file my tax declaration today, I wonder how would that work.
Does anyone own a NL-ETF (Netherland ISIN, eg VanEck NL0009690239, NL0009690221)? Wondering what the L2WT is for Swiss tax payers. Ie do they deduct anything from dividend payouts like US-ISINs or is it 0% like IE-ISINs? Thx!
The estv has a page with the details for each country:
https://www.estv.admin.ch/estv/fr/home/internationales-steuerrecht/fachinformationen/quellensteuer-nach-dba/auslaendische-quellensteuern-pro-land.html#1776269918
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Thank you!
I (… tried to…) read it - also the pwc one at Netherlands - Corporate - Withholding taxes - but I’m not certain enough I get all the tax language correct: I think that 15% WHT is deduced and you can get that accounted for swiss tax (DA-M) - in which case it would be similar to the 15% US-L2-WHT - but it’s bit confusing and I might totally misunderstand it.
That’s why I was hoping someone who already bought a NL-domiciled ETF paying taxes in CH could explain what they experienced.
If NL is similar to US with L2-WHT, then it would be less ideal to buy than eg IE domiciled ETFs … as with IE you pay 0% L2-WHT and that does make life a bit easier in my view.
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Super helpful thread, thanks all