ETF combo S&P500 (swap) and world ex USA

[Brabix]

Hi Baptiste,

The search engine didn’t yield any results, I hope this hasn’t been discussed already.

I’m thinking about the following ETF portfolio:

• 50% Invesco S&P 500 UCITS ETF (swap) TER: 0.05%, ISIN IE00B3YCGJ38
• 50% Xtrackers MSCI World ex USA UCITS ETF 1C, TER: 0.15%, ISIN IE0006WW1TQ4

The swap US ETF would allow me to circumvent the 0.15% Quellensteuer for US stocks without having to deal with a non-swiss broker like IBKR.
And in combination with the MSCI ex USA I could control the weight of US stocks.

The only downside that I can see is the risk if the banking institute that’s providing the swap would default. In this case, the worst outcome for the swap-based ETF seems to be a loss of 10% max: https://etf-blog.com/swap-etfs-kaum-risiken-hohe-renditen-steuervorteile/

I would love to hear your thoughts about this, thanks!

 

[Baptiste Wicht]

Hi @Brabix

I am not sure I understand. Do you want to use a Swap derivative on an ETF or an ETF that itself invests through swap instead of physical replication?

 

[Brabix]

Hi @Brabix

I am not sure I understand. Do you want to use a Swap derivative on an ETF or an ETF that itself invests through swap instead of physical replication?

Hi Baptiste,

I am a noob, so nothing complicated.
The Invesco ETF that I linked above invests through swap. My understanding is, that this replication method allows me to circumvent the Quellensteuer.

 

[Baptiste Wicht]

In this case, I think that you can indeed save on the 15% US dividend withholding by using synthetic ETFs. However, these ETFs are more risky and smaller.

So, it's up to you to weigh everything together.

Note that there is at least one Swiss broker with access to US ETFs: Swissquote. Currently, this is where I would invest if I had to use a Swiss broker.

 

[Brabix]

Hi Baptiste,

Note that there is at least one Swiss broker with access to US ETFs: Swissquote. Currently, this is where I would invest if I had to use a Swiss broker.

Oh, that's amazing news, I wasn't aware of that!
So I could invest into Vanguard Total World (VT) or Vanguard FTSE Developed Markets (VEA) with SwissQuote, save on the 15% US dividend withholding while not having to deal with the uncertainties of holding a IBKR account as a Swiss?

That's very good news, thank you very much for your help!

 

[Baptiste Wicht]

So I could invest into Vanguard Total World (VT) or Vanguard FTSE Developed Markets (VEA) with SwissQuote, save on the 15% US dividend withholding while not having to deal with the uncertainties of holding a IBKR account as a Swiss?

Yes. Of course, you will then pay Swissquote fees, but it is still quite efficient, especially for large portfolios.