Nothing is free in this world. True Wealth probably uses this offer to lure people with its free 3a offer so that they then invest their free assets with TW as well. They can introduce fees any time (because they have enough growth anyway, or their analysis shows this desired effect isn’t happening).
That’s why I’m staying with FP for the forseeable future:
maximum WHT recovered
no FX fees
lowest TER share class of funds used
costs are clear as it’s just one flat fee that covers everything
flexibility to choose whichever funds I want
I can’t invest in MSCI World Quality anyway with TW, but if I could, or if I would invest in the “normal” MSCI World, I’d stay with FP still.
About the QB/ZB Fund Classes: We (at True Wealth) know these technicalities are confusing, but an ordinary investor should not be too concerned about them. Both are funds with the same withholding tax advantages. And both have the same FX benefits when traded in CHF (i.e. there is no currency conversion required.) For the remainder of non-CHF traded instruments, we use netting & pooling to avoid FX mark-ups wherever possible. And for the remaining cases, our FX mark-up is a maximum of 0.10%.
We have chosen to use the QB classes as the TER is directly visible and more transparent to clients. ZB funds appear to be free, but they aren’t. Their external product costs are billed directly to the pension foundation and must be paid by the 3a provider out of its management fee.
By the way, our average TER for a 3a portfolio is .14% since we introduced the pension fund instruments.
Thanks for clarifying.
So the final impact is only the TER costs and the WHT impact is irrelevant as both share classes are considered Pension funds?
Since you are here, the management fees =0 should be seen as discount or a structural offer which can be counted on for longer period of time.?
Just trying to understand what should be expected. As you can imagine going back and forth (between providers) is also not good when it comes to 3a accounts
I have in fact tested TW offer. I must say the organizational part is well done. You get an IBAN in your own name (I chose BLKB custody), one strategy for both 3a and taxable investments. The default strategy is generated based on few parameters. After that, with default settings, all deposits go into different 3a accounts first up to the legal maximum for the year, then into the taxable portfolio. I think one can really only login once per year to pick up the tax statements.
So it’s the opposite of DIY approach and financial self-education that appeal people here. But it also works.
Oh yes, if one is looking for an all-in-one solution, TW is the best one out there. You can just transfer money and they take care of everything.
I pondered for a long time if I should transfer all my money there for the ultimate hands-off approach.
I could have overlooked the weird region coverage (no Canada or Nordics, but double Korea).
Maybe I could have overlooked the intransparent region weights (it’s not market cap, and TW won’t say according to which objective metrics they weigh the regions or based on what research they diverge from market cap). Yes I could change the weights manually, but I’d have to rebalance every once in a while, something that a robo-advisor should take care of for me (heck, even a dumb world ETF would do it automatically by design). I pay for not having to do anything myself, right?
And maybe I could even have overlooked having to pay stamp tax and losing US WHT.
But what I really can’t stomach are the fees. In the not too distant future, my portfolio will hopefully reach 500k, and that would cost me 2500.– per year, which is just way, way too much.
Regarding the 0.0% management fee offer for our Pillar 3a: We intend to maintain it in the coming years as well. For formal reasons, we have to renew it every July until the end of the coming year.
I was thinking to open an account for 3a at Truewealth for future purchases (new contributions). Just wanted to ask if I understood all parameters correctly
Key points
in terms of US withholding taxes, there is no disadvantage at Truewealth because they use similar pension funds like Finpension
overall product TER is 0.15%
management fees is 0%
FX markup is 0.10% for ETFs which are not traded in CHF
Stamp duties would only be charged to ETFs. This fees will be applicable at time of buying , selling or rebalancing
in general they try to optimize rebalancing but of course it’s not under their control
I assume I am fully flexible to choose whatever weights I want for any instruments.
Some questions
did I miss anything ?
if I adjust the weights of the instruments , would TER increase ? Or TER is same irrespective of what strategy I choose?
I find it a bit weird that there is no Swiss stocks in default portfolio. If someone uses Truewealth, can you confirm I can have Swiss Stocks too?
if management fees are raised, investor can always transfer the funds to another provider if competitiveness changes. Although I think even if it is raised, it would not be huge increase or else it’s a credibility issue. Couldn’t find any info about fees to transfer but is it zero?
I also have assumed, but I was wrong. They impose a limitation. There is a rather intransparent parameter they call “diversification” that can’t be below 5.0. It is shown in the demo portfolio, but it’s role is not explained. Allocations with “diversification” below 5 will not be accepted. That means, for stocks-only portfolio, you have to add some US stocks, otherwise you just can’t have enough diversification.
You summary sounds right to me, I am with them for quite some time now.
TER is depending on product selection. It is mostly between 0.10% and 0.14% for the things I have tried. You can see it on their public demo, which displays TER for the current allocation (you can change the allocations quite flexible, but there seems to be some constraints based on your risk level).
EDIT: Wow, it looks like they have changed their fees in a positive way now: looks like they have removed the “possible” fees they had in a previous version. Now it clearly states “Flat-rate management fee (on the securities): free of charge”. The document says “These Cost Regulations shall come into force on 31.12.2024.”
TER of a strategy is just a summary parameter, the weighted average of TER for instruments. Of course if you have 50% allocation to RE fund with TER 1%, your strategy TER will be around 0.4%. I see it as a purely marketing thing. The individual instruments are what I am looking at.
Don’t know about the default portfolio, but the fund on Swiss stocks is one of few (4) instruments that make sense to me. Also most tax efficient for this category.
I have a question for you. Since you have been quite some time with them, are you able to see the following -:
which costs have incurred in your portfolio other than TER
For example if stamp duties, FY, transaction fees (buy/sell) occur for your portfolio, are you able to see how much they were?
I am asking this because for other providers, there is an all-IN fee and it includes all transactional costs. Now for True wealth, there is ZERO fee on top of TER, so what happens to the costs that are incurred? They need to be paid from the portfolio somehow. Just trying to understand what to account for
Yes, I think you can easily see that in my understanding: open “Performance” → “Contribution” and then scroll down. There you can see stamp duty as well as FX fees for your full time of investment. You can also select the time period. These two numbers are very low in my portfolio (FX even 0, since I only hold CHF instruments). I would say they are on the transparent side here, but it is well hidden.
Not sure how useful my number is, since I am mostly with the US pension fund which does not have stamp duty at all. Then there is a few % with ETFs, so I am way below 0.02% per year. But you can easily calculate it based on the turnover you have (it is mostly deposits of course or strategy changes, but I would not suggest to change strategies too often…). FX is as I mentioned before 0, because I only have funds traded in CHF in my portfolio. But there are some funds not traded in CHF for some more niche asset classes I have seen.
Actually I don’t have an account yet. That’s why I cannot check
But thanks for info
I don’t change strategies once set but the portfolio can still have turnover due to rebalancing which is driven by strategy . And everytime there will be cost to transact
The only scenario when you won’t have turnover is when you have only one fund
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