Taxes of actively managed fund

Hi all,

Before learning about investing (some years ago), I decided to put some money in an actively invested fund. Although it’s clear to me how to declare specific ETFs when doing taxes, it’s unclear to me how to do it for this fund. Every month the charge some units as fee and of course I can’t find it in the Zurich tax system.

Does anyone have any experience on this?

Would be helpful if you could share the name of the fund…

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Search for “AI portfolios” and there are a couple of examples there. And here is the specific one

As I understand it, this is not a specific fund - but rather a managed portfolio with “adaptive asset allocation”, that dynamically reallocates your investment between nine different funds (and/or cash). On a weekly basis.

Good luck with including that on your tax return!
Probably a hot steaming mess to calculate the tax figures correctly. If it’s possible at all.

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For wealth tax purposes, simply report the NAV at year end.

I understand the etf isn’t distributing its income.

The cantonal tax authorities will determine the taxable income by

  1. applying a theoritical income to your year end NAV (a %-tage of the NAV)
  2. will ask for the etf annual report and try to determine a taxable income per share.

Non distributing funds/etf are definitely to avoid for a Swiss investor when not reported to the ICTax, unless you don’t bother to be arbitrary taxed.

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apulandia seems to hold a portfolio distributing ETFs though:

"AVAILABLE PORTFOLIO HOLDINGS (ETFs)
TLT
SHY
LQD
HYG
BWX
EMB
SPY
EFA
VWO Vanguard FTSE Emer. Markets CA Cash"

Some, probably all of these are distributing.

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PS: In theory it seems it could be quite straightforward to calculate a correct income figure for tax purposes:
For every distribution any of the 9 ETFs in the portfolio has made…

  1. just look up how much you (your portfolio) held at the relevant point in time (record date)
  2. multiply the number of shares of that particular ETF by the amount distributed per share
  3. convert to CHF at the applicable exchange rate provided by ICTax (though this time at the rate of the payment date, not record date)
  4. add cash interest, if applicable
  5. sum it all up

…anv voilà, you have your taxable income for the year. Should be bullet-proof.

There’s just the very practical issue of gathering all that data (does Sanlam even provide it?) and compiling it. Especially since the portfolio allocation changes every week.

Correct. All US ETF are distributing.

There is an issue when the wrapper (=Sanlam ETF) isn’t redistributing the dividends, but retains instead and doesn’t share the taxable income with the ICTax.

The cantonal tax authorities won’t bother looking at the effective distributions of all the underlyings investments during a fiscal year. It is a mixed of several US ETF with a weekly rebalancing.

I can’t find where the ETF is registered. Hope it’s in Ireland when there is a 15% tax on US dividends as per the double tax treaty.

Sanlam group is a company active in South Africa and in the Bermudes. No double tax treaty in place with the US, dividends would be taxed at 30%.

Good luck !

Did I miss something?

I can‘t find any indication that it’s structured as „wrapper“ fund (of funds), let alone an Irish ETF? There‘s no ticker symbol or ISIN. In the PDF performance report linked above, they aren‘t even speaking of it being a fund - but rather of a „portfolio“.

Yes, it says it’s a “Unitized managed account”.
It seems equivalent to having an advisor managing your portfolio, from a bank in Bermuda…not the most straightforward setup for tax declaration

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From a Swiss tax investor point of view, the term “portfolio” here is marketing. We have an ETF (charging 0.75% a year for the structuring + its cutting edge AI investment algorithm) invested in other ETF (charging between 0.1% and 0.5% a year I guess). It’s a wrapper and would classify as a fund of funds in Switzerland.

It’s unlikely the Swiss tax authorities will recognize this ETF as a “portfolio”. Have fun trying to do so with a Unitized managed account in the Bahamas.

I didn’t find the information neither and made an assumption in my previous post. More details below.

If detaining all the underlyings in your portfolio and benefiting from the double tax treaty (DTT) between CH and the US, distributions will be taxed at 15%. All can potentially be reimbursed with the DA-1.

If detaining Sanlam ETF, the country of its registration is important (=where the underlyings’ dividends are paid).
Ireland ? DTT can apply and dividends paid to Sanlam will be taxed at 15%. 15% lost for the Swiss investor.
Luxembourg ? No DTT. 30% on dividends. 30% lost for the Swiss investor.
Bahams/South Africa ? No DTT with the US. 30% on dividends. 30% lost for the Swiss investor.

Let’s not forget the double layer of fees 0.75% + the cost of each underlying ETF.

I hope that the ETF is over-performing to compensate it. Difficult to say. They have a home made benchmark for the comparison and their last monthly report doesn’t show the %-tage per holdings.

However, on February 28, 2021, we know they had 37% in cash.

A Swiss investor will invest in a tax inefficient (not speaking about performance here) to basically hold cash at 0.75%/year.

As others pointed out it’s not an ETF, but just a portfolio of ETFs.

Anyway for OP, I’d recommend you reach out to the company, I would be surprised if they don’t have tax documents you could use (handling taxes will likely be a common issue for their customers).

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Thanks everyone!

Clearly I need to research more about this situation.

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