Which one should you choose?
Hold everything in USD SSAC:xsws (USD)
Simply pay in CHF, no foreign currency account SSAC_CHF:xsws (CHF)
Both have the same performance.
There is no currency hedging - just a different purchase currency.
Example:
If you want to invest CHF 1,000:
With SSAC:xsws: Saxo changes your CHF into USD and buys
With SSAC_CHF:xsws: Saxo lets you buy directly in CHF, exchanges internally
In both cases you remain exposed to the US dollar risk, as the fund calculates in USD.
If you want, tell me:
Would you prefer to hold everything in USD?
Or do you want Saxo to settle in CHF for you?
Then I’ll tell you which suits you better.
You:
Does that mean it’s easier to sell in chf and without forex?
ChatGPT:
Yes - that’s exactly the point.
If you buy the ETF in CHF (SSAC_CHF:xsws):
When you sell:
You receive your money directly in CHF.
No manual forex exchange necessary.
Saxo automatically converts USD → CHF in the background.
Easier for taxes, reporting and if you live CHF-based (e.g. in Switzerland).
I see it quite often even with very educated people in Personal Finance field. No, if you buy stocks in USD, you have no exposure to USD, you have exposure to stocks. One ETF traded in different currencies is a prime example of this.
If you buy in CHF, broker has nothing to do with the currency exchange. It happens at the level of market makers or fund management.
I changed the title, added a summary table and also added a section about VIAC Invest, which came very close to dethroning finpension if it weren’t for their massive CH bias.
@VIAC_Daniel or anyone else from VIAC, if you’re reading this: you already have a “use bonds” toggle, please add a “CH bias” toggle to the Global strategies.
A “CH bias” toggle may be a bit confusing as they already have “Global” and “Switzerland” variants.
However, I fully agree that the CH bias in their default strategies is too high: 40% for “Global” and 75% for “Switzerland”. Even higher than the regulated 3a “Global” (33%) for some reason. In “Switzerland 100”, Nestle on its own is 10% of the whole portfolio while Apple is 0.85%. Nestle+Roche+Novartis make up 28.6%. That’s a crazy concentration risk.
Another odd thing, in my opinion, is that (in the <100 strategies) they have a 10% allocation to “Real Estate World” but no “Real Estate Switzerland” at all. For me it would be the other way round: if I want a real estate allocation, that should be focused on Switzerland, it’s stocks where I want mostly global exposure. (I suspect it’s due to the high TER of Swiss Real Estate funds, which could be a marketing disadvantage, but that doesn’t sound like a good reason to me, and in 3a they do offer Swiss Real Estate funds).
20% home bias for “Global” would be acceptable, in my opinion. And 40% for the “Switzerland” strategies, matching the Swiss allocations of major banks. I guess it’s too late now to change these strategies but they could always introduce improved strategies with new names.
Possible deficiencies of the default strategies would be less of a concern if they had a “World ex CH” fund. This could even be a virtual allocation where they internally use the three regional funds based on MCW and automatically update the allocations. I don’t understand why almost none of the robo advisors offer a simple world allocation in custom strategies. True Wealth and finpension Invest don’t offer this either. (To be fair, at least VIAC Invest offers 3 large regional funds, which make an approximation of World ex CH easier than the usual 5 funds, which still miss out on a few countries).
If they offered “World ex CH” and “Real Estate Switzerland” for custom strategies, I think VIAC Invest would be my recommendation for people who don’t want to use a broker. The bond fund selection could also be more extensive but the basics are covered there.
I believe that not offering a world fund is because these robo-advisors want to justify their existence by juggling 5-10 funds. “Do you really want to manually invest your money in these 10 funds, splitting your monthly contributions with the correct ratios and rebalance constantly? Let our solution do it for you!” Most people don’t realize that their needs could be covered with 1 ETF.
Another thing that irks me is this AuM model without a cost ceiling. Paying 0.4% on top of TER is cheap when investing 10k and ridiculously expensive when investing 1m. Some have degressive fees, but it’s still extremely expensive (e.g. True Wealth has 0.25% from 8m).
This might indeed play a role. I believe some active wealth managers do this as well, investing in 30 positions with lots of overlap and unnecessary transactions between funds to make things look more complicated than they are.
However, robo-advisors could still do this in their default strategies¹ if they must, and offer a world fund for custom strategies. At least in the past, fund TER was actually a valid reason to use country/region funds as UCITS world ETFs were more expensive. Now that there is a world ETF with a 0.06% TER, that reason is becoming irrelevant.
For finpension’s special tax handling, a separate US ETF from iShares may still be required. However, I think they should add the UBS Core MSCI World to their fund list for custom strategies. This would likely be trivial for them (they already do offer world funds but only non-standard variants).
¹ I would argue that a combination of developed world + emerging markets + Swiss equities + Swiss real estate + gold + a couple of bond funds already looks complicated enough and would still be reasonable for non-100% stock allocations.
I see that a bit different. If sh… hits the fan on US Stocks, a Robo Advisor that invested 70% of the customers assets in US Shares might be in big trouble, for lack of diversification.
I see generally three approaches taken:
some asset managers just equal weight US and European (ex. ch) stocks, and then give rest of the world a smaller weight (40% NA, 40% Europe, 20% APAC&Japan)
Others give Emerging Markets something like 30% of weight, to reduce US to about 50%. But that has played out very bad the last 15 years
Third ones give Switzerland about 30-40% of weight; which over the last 10-15 years probably was the smartest move of them all
As long as we talk about a Manager (and not a Broker), there is a need to deviate away from 70% US Shares. Historically, a CH Overweight was a smart move. I am not sure if this was still the case in 10 years, but all Asset Managers are probe for Windowdressing. So, I think it was ok.
Now that they lowered their fees to some extent, I’d also mention Avadis Aktien
TER of 0.55%, 20% CH 50% world CHF-hedged 15% Emerging & 15% small caps
Monthly standing orders (or lumpsum, or both), dividend reinvestment, monthly rebalancing, based in CH, has withdrawal plans as well. Pleasant to deal with and - for the impulse traders - last I used it, was perfectly offline with quarterly letters containing the portfolio statements.
Any reason why UBS VITAINVEST funds don’t appear as option? They can be bought at Swissquote and cost less than 0.20% TER and maybe at other brokers too.
Pro -: automatic rebalancing , low costs , no stamp duties
Cons -: CH domicile for US exposure, high Swiss exposure
It‘s less than 2x em market cap (em market is 10% with 20% home bias makes it 8%)
Small caps is about 50% more.
So not too crazy.
No em small caps likely due to cost (illiquid and expensive trading) and too small of a share.
The hedging is debatable of course, but not completely out there.
What I would be wondering though, is the 0.55% the true total cost? Because it says “Vermögensverwalter UBS, DWS etc.” for the indexed stocks. Are they just the custody accounts or are funds of them with their own cost used (maybe they use these 0% ter products though like 3As)
Also you have likely 30% unrecoverable withholding tax on US stocks due to swiss domicile.
With regard to Avadis. Their TER is truly their TER, there is no stacking of additional expense rate. 0.55% is still a tad high but if they were in the range of 0.4%, they were actually competitive with other Funds. This particularely as there was zero account no purchase/redemption cost.
What I don’t realy like there is the hedging and the overweight of EM. But at the same time, I understand that they don’t want to give MSCI World more than 50%; my preference would rather be a few percentage points less on EM and Small Caps, and in return some investment into MSCI Europe ex. Switzerland. But I think they don’t have their own MSCI Europe Fund. I would personally never buy the 100% Shares Fund, but their 60/40 is actually quite ok. But Vitainvest beats it for people that use a Broker, and Viac beats them for Customers that don’t want to deal with a broker…
I should have specified that I roughly eyeballed the factors compared to World ex CH according to marketcaps.
To be precise: DM (“World”) is 80.1% of the total market, minus CH 78.1%, EM is 9.3% and DM small-caps 9.1%.
So based on the fund’s 50% DM ex CH:
EM should be 50% ÷ 78.1% × 9.3% = 6.0%
DM small-caps 50% ÷ 78.1% × 9.1% = 5.8%.
15% actual weight means the fund invests 2.5 times more in EM and 2.6 times more in DM SC relative to World ex CH. 60/10/10 would still be a factor of 1.4, but more appropriate IMO.
Do we know in which index funds they invest in? Maybe they use IE funds for non-CH assets.
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, tu confirmes avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
