From my side, recommended ETF for your desire could be SPDR ACWI (TER 0.12%, traded in CHF on SIX. It is also part of ETF Leaders list at swissquote & hence eligible for flat fees . For other World ETFs, read the wiki
Another interesting one is FWRA or SSAC
Following is interesting request. But unfortunately, no one will be able to answer this question. Whether it is distributing or accumulating is less important to me. What is important to me is that the world ETF has performed best in the past and hopefully will continue to perform best in the future.
You might be interested in buying your ETFs via Yuh!
The traing element of YUH! has its back end provided by Swissquote but the advantage is that there are a few Global ETFs (VWRL, VHYL, IWDC, EQCH) as zero commission and no custody fees.
I have started to invest in these ETFs (small investments) with YUH! just to see how it works. (despite also having a main Trading Account with SQ.
On the topic of withholding taxes and having to wait to reinvest dividends, hereâs a calculation based on the following assumptions:
Swiss domicile investor
world portfolio, US assets 62% and ex-US assets 38%
dividend yield is 1.5% for US and 3% for ex-US
L1 WHT
US assets have 0% L1 WHT for US funds and 15% unrecoverable L1 WHT for IE funds
ex-US assets have unrecoverable L1 WHT: 12% for IE funds, 10% for US funds (assumptions from Bogleheads wiki)
L2 WHT
US funds have 15% L2 WHT on the entire dividend amount (so ex-US assets as well), reclaimable through DA-1
IE funds have no L2 WHT
DA-1 paid out in full, on average 1 year after dividends have been paid out, which have missed 1 year of stock market returns of 7% on average
With these assumptions:
IE funds lose out on 0.276% yearly performance
US funds however also lose out on 0.135% yearly performance, because of unrecoverable ex-US L1 WHT and money gotten back through DA-1 canât be invested for a year
difference: 0.141% less gains for IE funds
Now maybe accumulating funds could be another aspect where IE funds could improve further, if dividends are invested immediately back into the fund, compared to about to, what, 2-3 months on average for distributing funds, provided the investor reinvests them the day they get them?
I reduce my provisional tax payments by the estimated amount of Swiss withholding and DA-1. My investments are not affected at all by the delayed credit. The state doesnât pay interest on the delayed credit but that impact is much less significant.
Iâve looked at the accumulating funds a bit with timing in mind, also because I realized e.g. Amundi funds typically only doing dividends once a year could have a DA-1 like impact (though not as big as we get the dividends within 12 months, not 6 months or whatever after the year ended).
I havenât been able to find any sources on when accumulating funds reinvest though. (In particular looked at the Amundi funds due to their WEBG stuff). Hence, that they reinvest sooner is currently just an assumption for me.
(Talking accumulating funds, you also get fun where the ictax dividend is different than the dividend of the equivalent distributing fund, generating tax tracking-error. I think this is related to inflows/outflows and ictax obviously looking at the AUM at a point in time, but not sure)
Both accumulating and distributing funds reinvest all dividends immediately. A distributing fund that distributes every year does not let the money lay around uninvested for up to one year. While this may seem counterintuitive, it makes sense for the reason you mentioned. This would result in a pretty big performance impact (and therefore tracking error). For the actual distribution, they sell shares.
In this interview, an Amundi employee talks about that in detail: https://www.youtube.com/watch?v=xgpt6kj4l7Y&t=1019s
Why should the tax rate, and hence the tax bill, change based on the size of your DA-1 credit?
Or are you telling the tax office to send you a smaller bill, so that when your tax returns are finalized they increase the definite bill again, but this debt is immediately paid off by DA-1 credit?
I live in ZH where I can adjust provisional payments based on my estimate without having to notify the tax office. When I get the DA-1 credit, I immediately pay that back to the tax office. (Swiss WHT is automatically credited to the tax bill, for DA-1 they strangely donât do this). The final bill is then only to correct any errors in my estimate (+ potentially some interest).
If you live in a canton with strict provisional tax payments, this approach might not be as straight forward.
Just so I understand: letâs say your provisional tax bill is 10k, and you expect to get back 1k from DA-1.
Until September 30, you pay just 9k in taxes (you reduce it by the amount of DA-1 you expect). Sometime next year, the bill is finalized. Letâs say you hit it on the nail and the definite bill should be 0, but it is 1k, as DA-1 is not automatically deducted. But you also get the 1k in DA-1 paid out, so you use that to pay off the final bill.
Almost. I normally receive the DA-1 payout months before the final bill. I immediately pay back that amount, before receiving the final bill (in my tax portal I can easily generate a QR code for an additional payment). In the final bill this extra payment is then already accounted for.
(I also completely ignore the amount in the provisional tax bill and use my own estimate instead as that should be more accurate but thatâs a minor point).
Yes, in ZH itâs currently 1% p.a. Compared to your calculation with 7% stock market returns, having to pay 1% p.a. on the DA-1 amount is a lot less significant, though.
Both, cash and risk management. I want a certain minimum of cash available in bank accounts and I want a certain percentage of my net worth invested in e.g. stocks. Neither should be affected by the tax processing time or the tax interest rate.
When the interest rate on savings accounts was higher than the ZH tax interest rate, I postponed provisional tax payments, but now that doesnât make sense anymore. I donât want to invest owed taxes in stocks, though, as that would not match my asset allocation (and it adds the risk of having to sell shares at a bad time to pay the final tax bill in time, especially in case of unexpected loss of income).
While true, it is not relevant to the calculation. Youâre basically taking on a 1% loan from the state. Nothing can change the fact that you get the withheld part of your dividends back later.
You could do the same if youâd be investing into an accumulating UCITS fund: only pay 9k taxes, invest the 1k and sell those stocks (1.07k) next year when the final tax bill comes.
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