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The best ETF Portfolio for Switzerland in 2023

Baptiste Wicht | Updated: |

(Disclosure: Some of the links below may be affiliate links)

Before investing in the stock market, you will need to choose a portfolio. If you are in Switzerland, you will likely invest in index funds via Exchange Traded Funds (ETFs). For, this you will need to decide on a good ETF Portfolio for a Swiss investor.

Choosing a good portfolio is an important decision. You need to invest in a portfolio with low fees, high diversification, and good returns. And you should be careful about keeping it simple!

While there are many examples of ETF Portfolios for the United States, there are few examples for Switzerland. So, it is not trivial to choose one.

In this article, we go over the details of choosing an ETF Portfolio for Switzerland. And at the end of the article, I give you an example of what I think is the best ETF Portfolio for Switzerland.

Choosing an ETF Portfolio for Switzerland

Choosing an ETF portfolio is an essential step when investing in the stock market. You should keep the same portfolio for a very long time. So, you need to choose carefully.

If you live in the United States, you will have seen tons of examples of ETF portfolios. But if you live in Switzerland, you probably have not seen that many of them.

And if you live in Switzerland or Europe, you cannot blindly follow a portfolio from another country. We cannot compare Switzerland with the United States. Our stock market is 20 times smaller. And in some other countries, it is even smaller than that. So we cannot invest in the same way.

For me, the best ETF Portfolio for Switzerland has two essential parts:

  1. An ETF representing the entire world stock market. Or it holds two ETFs, one for the Developed World and one for the Emerging Markets, but not more than two.
  2. An ETF representing the domestic Swiss stock market. This part of your portfolio is called your home bias.

With these two parts, you can have a very diversified yet very simple portfolio. This portfolio is what I am investing in and what I recommend people to invest in.

We will see a few things in detail before I go over the ETFs that form the best ETF portfolios for Switzerland.

Home Bias

A good ETF Portfolio for Switzerland should have some domestic stocks. This allocation will be your home bias.

The main reason for this is related to currency. Since the Swiss Franc is a stable currency, other currencies tend to depreciate against the Swiss Franc. If your entire portfolio is in USD, you may lose a lot of value. So having an ETF in your local currency will help you.

Of course, you could hold only Swiss stocks in Swiss francs, and you will not have this issue. But having only Swiss stocks is not a great idea. A lot of Swiss companies are exporting to other countries. It means their performance is subject to currency exchanges.

The Swiss stock market is tiny, about 2.5% of the world’s stock market. So do you want to bet your entire portfolio on 2.5% of the world?

Finally, the Swiss stock market had lower performance than the world stock market, historically. So if you only invest in Swiss stocks, you will need a larger portfolio to sustain your expenses.

Another way of reducing the currency risk is to use ETFs that are hedged to CHF. But currency hedging is expensive and is generally not the best tool for long-term investing.

So, how much should you allocate to your home bias?

I think that between 20% and 40% should be allocated to a Swiss Stocks ETF. 10% is also probably OK, but anything below 10% will not make enough of a difference to bother with it. 50% is also probably okay, but you are making a large bet on the Swiss Stock market with such a large allocation. It is why between 20% and 40% is a reasonable allocation.

In my ETF Portfolio for Switzerland, I have 20% of Swiss Stocks. Currently, I am pretty satisfied with this. I may consider bumping it to 25% in the future, but no further.

I have done simulations of early retirement in Switzerland with Swiss Stocks. If you look at the results, this will also confirm the 20% to 40% bias.

For more information, I have an article about whether you should have a home bias in your portfolio.

What about bonds?

Unfortunately, Swiss bonds have been in negative territory for a long time now. And given the current situation, I do not believe they will become positive any time soon.

Therefore, I think it is not a good idea to invest in Swiss bonds at this time. You should not add Swiss Bonds to your ETF portfolio for Switzerland.

If the situation improves and bonds are back to yielding 1% or more, they may become interesting again.

What about foreign bonds?

Some people try to invest in foreign bonds instead. But doing so is not a good idea. I made this mistake myself. The problem with international bonds is that they will incur an additional currency risk to your portfolio.

When you invest in bonds, you want the bonds to lower the volatility of your portfolio. You want your bonds to help you when the stock market is not doing well. But if you add currency risk on top of that, you will not achieve this goal.

So, investing in foreign bonds is a lousy alternative to Swiss bonds for an ETF portfolio for Switzerland.

Alternatives to Swiss Bonds

There are several solutions to emulate bonds:

  1. Allocate some of your Swiss Portfolio to cash. Currently, cash is better than bonds. Of course, it is not great since it is still losing value due to inflation. But it still beats losing money with Swiss bonds.
  2. Invest in your second pillar. Most second pillar accounts offer around a 1% interest rate. It is not great, but it is much better than cash. And you will have some tax advantages as well. For me, this is the best alternative to Swiss bonds.
  3. Invest in gold. Gold has better returns than the second pillar and the Swiss bond market. And there are some excellent Gold ETFs. So you can directly invest in gold in your ETF Portfolio. But gold is not risk-free and can be quite volatile at times.

Of these three options, I prefer investing in my second pillar. But the second pillar has three limitations. First, it is limited in that you cannot invest a limitless amount into it. Secondly, you will not be able to get the money before you retire. Therefore, it is not ideal for early retirement. Also, you can only get tax advantages if you have not yet withdrawn from the second pillar. And without tax advantages, the second pillar is not great.

So, I would recommend starting with your second pillar. And then, you can allocate some part of your ETF portfolio for Switzerland into gold. Or you can bump a little your cash allocation until you feel at ease.

How to choose ETFs

For each position in your portfolio, there will be several choices for you. There are many ETFs for each stock market index. So, how can you choose between these ETFs?

There are several things you need to look at:

One excellent resource to find and compare ETFs is justetf.com. They have an extensive list of ETFs, and you can compare the information on different ETFs in a very convenient way.

For more detail about this process, I have an article about choosing and comparing ETFs.

The best ETF Portfolio for Switzerland

Now, we have covered the most important aspects of designing an ETF portfolio. Thus, we can finally go over the details of the ETFs.

Now, keep in mind that this is only an example, which only reflects my way of investing. Therefore, this portfolio may not be the best ETF Portfolio for Switzerland for everybody. And remember that I am not a personal advisor and that you should still do your research and not merely copy what I am doing.

Here is what I consider to be the best ETF Portfolio for Switzerland:

This portfolio is extremely simple and highly diversified. As I said, the percentages can vary. Between 20% and 40% allocated to Swiss stocks is a good range. So you could go 25/75 or 60/40, for instance. Anything between 20% and 40% would be fine. Adding more Swiss stocks will reduce your currency risk but reduce your returns.

Now, we can look into the ETFs. Which one you use will depend on whether you have access to U.S. ETF or not.

ETF Portfolio with U.S. ETFs

If you have access to U.S. ETFs, for instance, with Interactive Brokers, I recommend the following ETFs:

With this portfolio, you will have very low fees and high diversification. You also have the advantage of saving 15% of the U.S. dividends on VT. Saving on dividends will make a significant difference compared to the other portfolio. It is some extra optimization that you can do to your portfolio. But in the grand scheme of things, it will not change everything.

As an example, with my allocation of 20% to Swiss Stocks, this would give this ETF Portfolio for Switzerland:

This portfolio is the current portfolio I am investing in.

If you wonder why I talk about U.S. ETFs, here is why U.S. ETFs are great.

ETF Portfolio without U.S. ETFs

If you do not have access to U.S. ETFs, I recommend the following ETFs:

With my allocation of 20% Swiss Stocks, this would give:

This portfolio would be the one I would be using if I were not investing in U.S. ETF. If you want to be cheaper, you can choose one ETF for the developed world and one ETF for the emerging markets. That way, you can save a little on TER. But I prefer to have only two ETFs, even if the fees are slightly more expensive.

This portfolio has two disadvantages over the one with U.S. ETFs:

If you can, you should probably invest in U.S. ETFs. But I want to emphasize something that many elitists will not tell you: Investing in a good portfolio is much more important than investing in the perfect portfolio!

If your broker does not give you access to U.S. ETF and you do not want to change, then go ahead and invest with European ETFs!

Conclusion

You should now have a good idea of what ETFs you need as a Swiss investor. You can now decide on your ETF Portfolio for Switzerland.

The ETF portfolios from this article are just examples of what I recommend. Of course, this portfolio may not be the best ETF Portfolio for everybody. But you should now know enough so that you can do your research and decide for yourself in which ETF Portfolio you want to invest.

And remember: investing in a good portfolio is more important than investing in the best portfolio. If you take years to decide on the best portfolio and delay investing, you lose out on some opportunities. It is better to get started with a good portfolio, and you can refine it over the years.

Of course, you will need to have a broker account to invest in your ETF Portfolio. If you do not yet have a broker, here is a guide on choosing the best broker account for Switzerland.

If you want more control over your portfolio, I have a guide on creating an ETF portfolio from scratch.

What do you think of this ETF Portfolio for Switzerland? How does your portfolio look like?

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Baptiste Wicht started thepoorswiss.com in 2017. He realized that he was falling into the trap of lifestyle inflation. He decided to cut his expenses and increase his income. This blog is relating his story and findings. In 2019, he is saving more than 50% of his income. He made it a goal to reach Financial Independence. You can send Mr. The Poor Swiss a message here.

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242 thoughts on “The best ETF Portfolio for Switzerland in 2023”

  1. Thanks for everything! I was about to fall in the usual trap of the insurance 3B and other brilliant “managed” financial products, but your blog saved me! really thanks!
    As now in IB we can buy again US ETF, is the list of ETF you suggested here still valid, or should something change? tnx

      1. thanks for the quick reply. I’m using the 5 ETF you suggested.
        I have another question if you don’t mind…
        when I select the asset you suggested, IBKR asks me from which stock exchange I should buy it.
        I searched online but I couldn’t find much regarding which stock exchange is better.
        Should I just pick the asset from the larger stock exchange?
        Any tip on choosing the ticker(?) will be appreciated.
        thanks again for everything you are doing!

      2. For VT, normally you don’t have a choice, it’s on NYSE/ARCA.
        For CHSPI, it should be on SIX.

        I only suggest two ETFs, what are the other 3?

      3. Hi Baptiste. Am I missing something?
        I was following what you suggested here. is it not valid/worth anymore?
        https://thepoorswiss.com/etf-portfolio-european-etfs/

        Swiss Stocks: 20%: iShares Core SPI ETF (CHSPI): TER of 0.10%.
        U.S. Stocks: 50%: Vanguard S&P 500 UCITS ETF: TER of 0.07%.
        Pacific Stocks: 10%: iShares Core MSCI Pacific ex-Japan UCITS ETF (Acc): TER of 0.20%.
        Europe Stocks: 10%: iShares Core MSCI Europe UCITS ETF: TER of 0.12%.
        Emerging Markets Stocks: 10%: iShares Emerging Markets UCITS ETF (Dist): TER of 0.18%.

        thanks again! :)

  2. Thank you for your post, it’s been incredibly useful following your blog.

    How does the Pillar 3A strategy fit into the portfolio?

    Do you recommend maxing out the account and rebalance your stocks accordingly?

    For example, Global 100 VIAC has a 40% Swiss allocation, which means that it would go towards lowering the CHSPI allocation in Stocks on IBKR.

    I have been investing 100% in VT in the past couple of years but only now started thinking about currency risk/fluctuation and would like to add some CHF that I kept cash to my portfolio, but struggling to get a good benefit/costs analysis when comparing buying CHSPI from IBKR vs Global 100 in VIAC.

    1. Hi Dan,

      Ideally, you would want your overall portfolio to match your portfolio (80/20 in my case).

      I would say it depends on how much you have in your 3a compared to your stock portfolio. For me, my 3a is less than 10% of my stock portfolio. So I simply consider my stock portfolio alone with its 80/20. Over time, this may change and I may readapt so that I will have lower stocks in my stock portfolio.
      On the other hand, if the 3a makes a good portion of the free net worth, it should definitely be considered.

      In any case, I also keep a full overall view of my assets where I look at everything. For instance, in here, my second pillar plays the role of my bonds. And I currently have some much in CHF with my house, second pillar and some stocks, that I don’t want to have too much CH stocks in my IB account.

  3. Now that I can’t invest in VT anymore and will go back to investing in European ones until this gets sorted out, I wonder: why “Vanguard FTSE All-World UCITS” and not “iShares Core MSCI World UCITS”? It’s true that the latter is accumulating and whoever wants dividends might not like that, but the TER is slightly lower and the fund is 5x larger (in terms of assets under management).

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