I’m trying to compare apples to apples when looking at VZ versus Swisscanto at LUKB, and the TER seems to be respectively 0.68% (all-in) vs 0.60% (0.25% management + 0.35% underlying funds’ TER). I see a Kosten p.a. column in the VZ Titelliste, is that already included in the all-in fee, independently of the fund you choose?
No, the individual fund’s TERs must be added on top of the 0.68 allin fee. so you should correct the 0.68 to 0.78-0.98%, depending on your choice of funds. the 0.68% are billed quarterly, the fund’s TER are not explicitly billed but payed as the funds take out their fees from the fund assets.
18% iShares Global High Yield Corporate Bond CHF Hedged
Junk bonds no good to be in these days if you’d listen to this guy
https://seekingalpha.com/author/the-heisenberg/articles#regular_articles
… and if i listen to this guy I should not at all invest into stocks!
Maybe you are right after all, but certainly not because somebody says so^^
Your guy seems to be making an abstract argument against stock picking and day trading in general if you look Into his reasons.
My guy’s main argument is more about a concrete point about current state of the market: diminished risk premium compared to investment grade bonds. You’re sponsoring junkiest junk on earth (euphemistically called “high yield”) and after the big rally in prices you’re now paid just barely above what creditworthy companies pay plus default rate, and the outlook is not so good that there’ll be buyers for these bonds if a mass exodus out of these ETFs starts
After some optimization I now have the following Strategy:
80% Stocks:
- 39% World ex Swiss CHF Hedged: CSIF World ex CH Index Blue CHF Hedged
- 13% World ex Swiss SC: CSIF World ex CH Small Cap Index Blue
- 13% EM: CSIF Equities Emerging Markets
- 12% SPI Extra: Swisscanto Index Equity Fund Small & Mid Caps CH
- 3% SLI: iShares SLI
18% Bonds:
- 6% World Gov: UBS IF Global Aggregate Bonds Passive CHF Hedged
- 6% Dev. World HY corporate: iShares Global High Yield Corporate Bond CHF Hedged
- 6% EM Bonds: CSIF Bond Emerging Markets Index Blue CHF Hedged
2% Cash CHF
I take full advantage of the 80% stocks allocation, which is the currently known maximum for 3a Investments. The 13% of world SC & EM add up to the 26% of non-CHF-non-hedged assets (the 27th percentile was not allowed in their selection mask). 2% cash are also required. the remaining 18% are evenly spread over different bond markets. with a total average TER of 0.2435% and 0.68% allin, I own this portfolio with at total TER of 0.9235 %, plus swiss stamp taxes on transactions.
The high TER and restriction in Product choice make me reconsider if i put money there in the future. but the money i put there already is now put to good use.
Do you have a limit to world stocks hedged allocation ?
The TER is still too high, however now Switzerland don’t have to be too overweighted.
Do you have a limit to world stocks hedged allocation ?
i think not, maybe 80% of this would be possible.
Switzerland don’t have to be too overweighted.
This is a matter of discussion and personal preferences. I see both a reason to set it to 2.7% (=share of swiss stocks in Vanguard total world stock fund) or 100% for elemination of currency risk. everything else is quite the same arbitrary.
may I add that no transaction cost of rebalancing apply, which for a hypothetical portfolio of CHF 20’000 and 8 assets easily goes to CHF 80-200 per year (assuming CHF 10-25 per transaction), in this example 0.4-1%. Then this 0.92% s not so bad anymore. Including transactions after adding funds, this is not bad at all. for larger 3a pillar sums, it becomes less favourable ofc.
So today they rebalanced (=implemented my new individual strategy) at VZ. It did cost only the stamp tax, and it was 0.03% of my portfolio (selling and re-buying the whole amount). now it looks like 
80% Stocks is the max, also 2% liquidity is required. the non-swiss-non-hedged part is limited to 27%.
I think this is about the most passive-indexing-longterm-investment thing you can currently do within the 3a framework. it comes at the cost of an 0.68% p.a. allin fee.
Why do you have so much Small cap (25%) ?
Would it be possible to include Emerging markets ?
the small cap is a personal preference of mine.
i have emerging markets (3rd position) in there, 13%. it is not hedged to CHF, that 27% cap applies. i filled those 27% with small cap & EM stocks
0.68% with or without underlying TER?
see here: [20charspam]
Are you still with the same pilar 3a? Any changes since May?
@Nugget:
Same question as Zugzoo, did you change the allocation?
Also you were saying that high TER + restricted products will make you reconsider putting money there in the future.
What else do you have planned?
I just moved to Switzerland for my first job ever, and I would see myself staying here for a long time.
I’m interested in the 3a+3b as a way to invest passively (Set up an easy portfolio that re-balances automatically) and as a bonus get the tax deduction.
Kind regards,
Philippe
That’s the ONLY thing you’re getting out of it, don’t get fooled
It’s expensive. Unless you have a short enough time horizon before withdrawal, high tax burden, mortgage to pay back, or just want to keep a lot of spare cash in portfolio, I’d avoid 3a.
Forget about it, it’s not tax deductible. Just a con made by banks to fool you into giving them more money
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Hi hedgedog,
Thanks for your message.
What do you mean exactly by spare cash in portfolio?
What would you advise for someone in his early 20s that wants to start investing 1,250-2,000 CHF a month?
My plan so far was to add 500 to my safety net (currently has equivalent of 4 months of living cost) & 750 in 3a+3b at VZ with a portfolio similar to what nugget has on this page.
I have another 750 that I can invest without an issue and I’m wondering what’s the best way.
Thanks for your help,
Philippe
so,
what hedgedog points out has a true core: 3a does have some tax advantages (income tax reduction and wealth tax reduction), however, it comes at the cost of companies offering 3a soltions want to earn some of these advantages in form of fees. in the VZ case, it is a 0.68% fee. in you want to go exact (consider transaction costs that they include into this 0.68%…) you will have to do some explicet modeling, try my 3a calculator for this, i tried the best i can to assess these things. turns out, if you start at 20, the tax benefit is pretty much eaten away by the higher fees by the time you get 65.
so, put some time into deciding if you want the 3a thing or not.
i join in in the “forget about 3b” thing. better get yourself an IB account and put everything into index funds /ETFs, according to your investement statement policy (make one if you have not done yet)
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Just buy an index fund
If you’re fully invested into stocks and they drop, where will you get the money to buy them when they are cheap? In classical portfolio this is solved by keeping a portion of assets in bonds - they’re typically low or even negatively correlated with stocks, so you can sell them off and buy the dip. But CHF bond yields are negative and inflation is low so better to just keep it all cash. Cash only 3a might actually be a good option to park the unneeded money and pocket some taxes, but I wouldn’t view it as main investment vehicle
All fund linked I’ve seen are rather expensive not just VZ. Index choice is very limited and CHF hedgeding is forcibly shoved down your throat
Plus ETF fees. Plus hedging costs. Plus foreign taxes. Plus negative bond yields if buy any of that. Plus the fact that some portion of portfolio has to be uninvested cash that they still charge you 0.68% instead of paying interest on!
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