VIAC Third Pillar

Hello Mustachians,

Given that Viac Global 100 seems to be as of now the best third pillar available, are you planning to change the strategy given the harsh market times we are going through? If not, why?

Why and what would you suggest to change?

Well apparently you can change strategy directly on their website/app to allocate differently you investment (increasing/decreasing the percentages of stocks and risk). I ain’t suggesting anything, I am looking for suggestions :grin:

Yes you can do your own strategy using all the indexes they propose. If you already have an account you can try before putting money in it. If you have 15+y in front of you, put it all in equities.

My suggestion:
50% msci world ex ch no hedge
10% emerging market no hedge
12% smi
25% spi extra
3% cash

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I am a first timer. Haven’t yet put any money in it and I am aiming for long term investing as you suggested. :grin:

I suggest you take time to compare Viac with frankly from ZKB. You can find a good cost breakdown here:
https://www.moneyland.ch/en/frankly-pillar-3a-zkb-review

Viac lets you use a slightly higher stock component. But frankly can work out cheaper in some cases. This is especially true when you account for currency exchange costs.

Another option would be to divide your pillar 3a assets between both in order to spread risk. On that line, WIR Bank (Viac’s partner) is quite heavily dependent on the Swiss SME sector, which is currently being hit pretty heavily by the coronavirus measures.

I use Viac myself, btw, but now that it has a competitor, you have more room to be choosey.

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This would matter only if you hold cash at VIAC, which you probably don’t?

Also, cash in 3a, while not a protected deposit, is still a preferential deposit.

From a Swiss - ans swiss tax - perspective - which portfolio do you have in Viac 3a?
Global 100 or did you use other, individual strategies?
If I am looking for something similar than VT - is that Global100?
Thanks
Woodman

Not really, for mimicking VT you would need to personalize the allocations and opt for CHF-hedged funds (to add to ca. 55% for US).

Global 100 is something like:
CH 39.00%
US 34.00%
DEVxUSxCH 18.00%
EM 9.00%

Some state that hedging is worse than being overweight CH.
I do wonder if it really is that much worse to be worth being overweight to e.g. 15-20% CH (when considering overall portfolio, not just VIAC - the exact number depends of course on your assets outside of VIAC).
Need to read up myself on why exactly. :slight_smile:
Other than the logical dependency on forex rates - that it can be a losing bet if the foreign currency (in which the underlying assets are trading) is appreciating (but then again can be beneficial if it goes the other way).
I guess it’s adding an additional risk to the mix, and would like to read a more detailed analysis of the exact impact to decide.

As the FED rates are very low now, USD hedging is quite cheap (1%/year). So maybe it wouldn’t be that bad to use CHF hedged funds, especially if you believe that USD will get weaker in the coming years. To replicate VT as close as possible you’ll probably go with:

3% cash
1% SMI
1% SPI Extra
12% EM (keep in mind that South Korea is included here, so VT would be at 11.8% with South Korea and Other)
10% Small Caps
34% World CHF hedged
39% World

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Can you help me understand where this 1% is coming from? Or what’s the best place to read more about it.

SNB rate - FED rate = hedging cost for CHF/USD. To be exact it’s actually the difference between short term state bond rates (1 year for example).

@dbu
Btw, an overweight to Swiss stocks isn’t really that bad. It had an avg. return of 8-9%/year in the last couple decades (see MSCI Switzerland). So in CHF even better than the SP500. My personal take: Switzerland will keep outperforming the rest because of several factors. We are very similiar to the US (high inflow of skilled workers, a lot of high tech companies, low taxes for companies etc.) but have several advanptages like a more stable political system, free schools, high median salary, basically no poverty, no war and pretty good relationships with the rest of the world (US, China and Russia). This might be priced in already, but I’m willing to take the bet and set CH to 37%.

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What are your VIAC Third Pillar strategies and why did you chose them?

I have a question to other VIAC users. Does the fact that the various Credit Suisse funds (I have not checked the UBS ones since I don’t use them) use derivatives bothers you? I am asking because when I was looking into Boglehead style passive investing, other on the Boglehead forum or e.g. here, it was almost always advocaded to only go for ETF with full physical replication of the index.

Here is the link for the prospectus for those interested.

Where do you see they do synthetic replication for the index funds? At least when checking a few subfund the KIID says it’s physical replication.

So if you look at e.g. iShares Core S&P 500, it is indeed a physical replication. However, it is not the case for the CSIF ones. In the link that I provided and which comes from the CSIF funds prospectus, you can look p. 9 bottom right column the CSIF (CH) III Equity US Blue - Pension Fund, one can read:

Appendix. In some cases, it may invest in a representative selection of securities from the benchmark index (optimized sampling) rather than in all the securities in the index. Selection is facilitated by a system that takes account of both quantitative factors as well as factors that determine returns. The portfolio may be limited to a representative selection of securities from the benchmark index owing to the investment restrictions set out below, to other legal or statutory restrictions, to costs and expenses incurred by the subfund, or to the illiquidity of certain securities. These optimization strategies can involve holding securities in a different proportion to that of the benchmark index and/or using derivatives to replicate the performance of specific securities contained in the benchmark index.
The subfund invests
a) in equities and other equity-type securities and rights (shares, dividend-right certificates, shares in cooperatives, participation certificates, etc.) of companies which are contained in the above-mentioned benchmark index;
b) temporarily in assets as per prov. a) of companies which are not contained in the benchmark index but where there is a high probability that such securities will be able to join the benchmark index on the basis of its acceptance criteria;
c) up to 10% in assets as per prov. a) of companies which are not contained in the benchmark index but have similar investment characteristics with a corresponding risk profile;
d) in units of passively managed domestic and foreign collective investment schemes, either exchange-listed or unlisted, that are compliant with the investment policy;
e) in derivatives (including warrants) on the above investments.
Investments (including derivatives on these investments) which are dropped from the benchmark index must be sold within an appropriate period while safeguarding the interests of the investors.
The subfund may invest up to 20% of its assets in money market instruments issued by borrowers worldwide and in all freely convertible currencies within the meaning of prov. 2 d) above.
Furthermore, not more than 5% of the subfund’s assets may be invested in futures
– on the aforementioned benchmark index
– on the indices of individual countries and regions that are reflected in the benchmark index
– on indices which are primarily based on the same markets as the subfund’s benchmark index.

You can also look at the CSIF Pacific ex Japan, where p. 9, one can read:

Through direct and indirect investments, the subfund may track the
benchmark index given in the table at the end of the prospectus
(“benchmark index”). In some cases, it may invest in a representative
selection of securities from the benchmark index (optimized sampling) rather
than in all the securities in the index. Selection is facilitated by a system that
takes account of both quantitative factors as well as factors that determine
returns. The portfolio may be limited to a representative selection of
securities from the benchmark index owing to the investment restrictions
set out below, to other legal or statutory restrictions, to costs and expenses
incurred by the subfund, or to the illiquidity of certain securities. These
optimization strategies can involve holding securities in a different proportion
to that of the benchmark index and/or using derivatives to replicate the
performance of specific securities contained in the benchmark index

So while they might not use only derivative, I am not sure we can know exactly what they do.

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Hi guys,

I’d like to reproduce a World exposition and VIAC is really good for that. The default VIAC Global 100 equity exposition put a lots of weighting to Swiss:
|—|---|—|
|Asia|12%|CHF 0.00|
|Europe|11%|CHF 0.00|
|Africa|1%|CHF 0.00|
|North America|34%|CHF 0.00|
|Switzerland|40%|CHF 0.00|
|Latin America|1%|CHF 0.00|
|Oceania|2%|CHF 0.00|
|Total|100%|CHF 0.00|

But if you look at the MSCI World country weights, Switzerland represent only 3.50%.
I changed to an individual strategy to follow the above propositions with a more balanced World approach with
|—|---|—|
|CSIF SMI|7%|CH|
|CSIF SPI Extra|3%|CH|
|CSIF World ex CH hedged - Pension Fund|27%|CHF|
|CSIF Europe ex CH|23%|Euro|
|iShares Core S&P500|17%|USD|
|CSIF Canada|3%|CAD|
|CSIF Pacific ex Japan|6%|Asia|
|CSIF Japan|4%|Asia|
|CSIF Emerging Markets |7%|Asia|

In order to do that you to take a derivative hedge CHF product such as CSIF World ex CH hedged - Pension Fund and there is one thing I do not understand on the product. VIAC advise it as 0% cost but when you look at the KIID you can see 5% entry charge and 2%exit charge in addition of the 0.27% ongoing charge.

How do you understand the 0% product costs from VIAC website ?

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Did you check the right share class? Viac uses the institutional version and the fees normally go out of the 0.5%.

I couldn’t find the product you mentionned, on the VIAC products’ list. ISIN CH0348026649 ? Not there.
I think you meant CH0032400639 (CSIF World ex CH - Pension Fund, factsheet). The factsheet indeed states that the “ongoing charge” is 0.00%.

Thank you nabalzbhf and bonanza.
I’m talking about the CH0198191493 CSIF World ex CH hedged – Pension Fund in CHF currency.
It’s just bellow the USD CH0032400639 that I can find in their Assets list.

As mentioned by nabalzbhf , the ongoing charge is 0% and the spread between 0.03% and 0.08%.

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