VT and VTI alternatives in CHF

Investing / Portfolios
1

Hi all,

I am helping a family member build an index fund portfolio. One caveat - they insist on it being in CHF or CHF-hedged, no persuasion works in this regard, they are adamant. So I am looking for two low-cost ETFs hedged to CHF - one World Stock market and one for US stock market (either S&P500 or a broader one). Basically, looking for an alternative to VT and VTI in CHF.

Does anyone have any suggestions? I find both UBS and IBKR very difficult in terms of finding the right ETFs, and JustETF seems to not have much (and doesn’t show all of the available ones).

Many thanks to everyone in advance!

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I like SSAC, traded in CHF, a lot.
Did you already decide on which broker to use though?

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For example

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If it’s one big investment, the best in to use an accumulating fund. Also I don’t recommend hedged.

Few options:

  • V3AA, FTSE Global All Cap Choice, 0.24%, acc, 274 millions, spread: 0.340%
  • FWRA, FTSE All-World, 0.15%, acc, 84 millions, spread: 0.227%
  • WRDUSY, MSCI World, 0.1%, dis, 165 millions, spread: 0.152%
  • SSAC, MSCI ACWI, 0.2%, acc, 10000 millions, spread: 0.262%
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For anyone wondering about the low volume: this ETF was just launched about half a year ago. But volume is rising rapidly – at the end of January 2024, it has reached $93m already. I expect it to surpass the “magic barrier” of $100m this quarter.

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Two accounts will be used - IBKR and UBS. Again, they are adamant about having a part at UBS, can’t persuade them not to.

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Agreed, accumulating would be best. I also dislike hedged. Thank you!

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Is the spread = FX margin for USD/CHF conversion at exchange level (SWX)? Where do you get this info?

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Why not Neon ?
They have FTSE All-World. Simple to use and investing for free until 31.03.2024

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Watch out, before they are blaming you if something is not working out - especially if they have no clue (no offense) and want to stay with a high fee bank (UBS) and are ignorant regarding an explanation regarding the USD/CHF topic.

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You jump from “in CHF or CHF-hedged” to “hedged to CHF” - why?
When you say “World Stock market”, do you mean World-ex-US?

What is family member’s opinion to VWRL, in CHF, traded on SIX? It’s more-or-less VT, in CHF, yes slightly different index, but close enough IMO.

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VWRL is traded in CHF. Expect to get a call once they see the dividends in USD…

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This:

May increase the risk of this:

I would try as much as I can to be purely explanatory and letting them take the decisions without trying to apply convincing. It’s their money, they need to be in charge of it and it’s all too easy to blame someone else whatever the scenario is (loosing more than expected by being invested in too risky assets (and/or assets of which the risks are not fully understood) or lagging behind other top performers if invested in less risky assets, or simply by not winning the lottery and picking the singular stock/sector that skyrockets and gets talked about in social circles.

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The “trick” here is to simply have no USD account, then the USD dividends get automatically/magically exchanged to CHF = no telephone call.

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Expect to get a call once they do their tax return.

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How about their low-cost mutual funds someone mentioned recently?

Tax optimisation for ETF investing - #341 by Abs_max

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MSCI world
—————

IWDC (basically a developed world CHF hedged index) is quite popular in Switzerland

SWDA is unhedged version but trades in USD (also accumulating)

MSCI ACWI
—————-

SSAC(CHF) accumulating version might be good choice but it has low volume on SIX, so something to keep in mind.

It’s important to note that accumulating world ETFs are typically not traded in CHF unless they are hedged to CHF. At least based on what I found on SIX that’s the situation.

UBS also has a global passive index fund CH0356507415. It’s not really global like VT because it’s MSCI world ex CH. These can be bought anywhere but I think buying on UBS should be possible too. Of course account for the custody fees drag.

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I have heard a lot about FWRA but does it also have good tracking difference performance like VWRL?

I am still not sure if lower TER results in higher performance for FWRA vs VWRL.

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Looks pretty good, return since 01.01.2014, development of USD/CHF taken into account:

ETF Total Return (CHF) Annualized Return (CAGR) Volatility Maximum Drawdown
VTI ETF (CHF-adjusted) 138.14% 8.76% 14.32% -36.79%
VT ETF (CHF-adjusted) 146.10% 9.30% 14.77% -37.42%
VEVE ETF (CHF-adjusted) 157.82% 9.80% 16.87% -39.63%
IWDC CHF hedged ETF 130.43% 8.54% 13.92% -34.79%

One must decide if 16% delta to VT is justified for beeing “insured” through an CHF hedged etf and paying nearly 18-times more.

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I think equivalent for IWDC would be something like VEVE even though not 100% equivalent. Because VTI is USA only and US outperformed many countries in last decade.

The value of hedging is not so clear. It seems all research points out to no clear conclusion