VIAC 3a changes in Rebalancing, ESG

From VIAC:

VIAC’s Pillar 3a offering will be enhanced with the following features as of 31.08.2021:

  1. Now: weekly rebalancing

Rebalancing will take place on a weekly basis starting Tuesday, 31.08.2021. Deposits, transfers and strategy changes will henceforth be invested or implemented weekly on Tuesdays. If it is a public holiday, the rebalancing will take place on the next possible trading day. Between Christmas and New Year, there will be no rebalancing due to limited tradability.

  1. Expansion of fund universe for individual strategies

As of Wednesday, August 18 2021, you can choose the following new funds for your individual strategy:

  • CSIF China Total Market, LU1815001406

  • iShares Global Clean Energy, IE00B1XNHC34

  • CSIF SPI ESG, CH0597394516

  • CSIF World ex CH ESG hedged - Pension Fund, CH0337393851

  1. Withholding tax in Japan

In addition to the USA, you now also invest in tax-exempt fund tranches in Japan. The switch to tax-exempt fund tranches will take place automatically for all customers as of 31.08.2021. The following funds will be replaced by the tax-optimized counterpart:

  • CSIF Japan

  • CSIF World ex CH - Pension Fund

  • CSIF World ex CH hedged - Pension Fund

  • CSIF World ex CH ESG

  1. Sustainable implementation of Swiss equities

In spring 2021, SIX launched a sustainable index on Swiss equities. The SPI ESG excludes companies with an ESG impact rating lower than C+. It also excludes companies that generate more than 5% of their sales in a critical sector (including alcohol, defense, gambling, genetic engineering, nuclear energy, coal and tobacco). The fund also does not invest in companies recommended for exclusion by the Swiss Association for Responsible Investment (SVVK). The new CSIF Equity Switzerland Total Market ESG fund replaces the previous Swiss equity funds in all sustainable standard strategies.

I’m unsure whether this move to a more frequent weekly rebalancing would lead to increased fees (commissions and exchange rate, both VIAC and third parties), what is your view?
In such case, it may be beneficial to switch to an individual strategy.

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I am sure it will. I set 99% individual funds strategies at finpension exactly to avoid trading. Which you still can’t do at VIAC (?)

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I doubt they’re changing rebalancing bands so that shouldn’t have any impact on that.

What it helps with is when transferring funds or changing strategy, don’t have to wait a few weeks before it’s in the market.

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I think they moved to weekly rebalancing due to much higher assets under management. I hope the increased trading costs are minimal.

I don’t think it will change much at the level of an individual customer.

In my understanding rebalancing is only triggered when the portfolio deviates too much from its target allocation. Under normal market conditions and with no incoming payments, this only happens every couple of months and most rebalancing dates have no effect for a portfolio left alone.

So even somebody who does monthly 3a payments will probably experience only one rebalancing per month except in rare occasions of high volatility. And somebody who pays once a year will count the number of rebalancings per year on their fingers.

But at the level of the management, it probably makes it easier to reduce the turnover in every rebalancing.

I just sent an email to viac support to ask if we can expect no higher fees. Further I also asked them what was the reason for more frequent rebalancing. I would prefer once a month… I am not sure, if weekly rebalancing can increase the returns.

I will share their answer here when I get it.

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I guess the reason is that if someone transfers funds at the beginning of the month or if someone changes the strategy they don’t have to wait a month for it to be applied. I think as long as your portfolio does not deviate significantly from your SAA it doesn’t have an impact on your portfolio.

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I agree, waiting less to get cash invested will be the main benefit.

I don’t think any increase of the returns should be expected by this change, first because the rebalancing will not be more frequent if you take each person separately, but also because even if it were, the rebalancing bonus barely makes any difference between monthly or weekly.

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According to When is a rebalancing triggered? – VIAC VIAC only rebalance when your allocation deviates 2% or more from the target allocation.

My Global 100 strategy, has, since January 2018, only rebalanced in May 2018, September 2018, June 2019, March 2020, June 2020 and April 2021.

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Hereafter a short summary (and translation) of their answer (originally in french).

They also prefer a monthly automatic rebalancing of the strategy if they deviate to much. The weekly rebalancing is only in case of cash inflow, or change of strategy.
They also confirmed that there will be no fee increase.

It’s exactly the answer I wanted to hear. This changes are a great improvement of their solution!

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