The best ETF Portfolio for Switzerland in 2024
| Updated: |(Disclosure: Some of the links below may be affiliate links)
Before investing in the stock market, you must choose a portfolio. In Switzerland, you will likely invest in index funds via Exchange Traded Funds (ETFs). For this, you must decide on a good ETF Portfolio for a Swiss investor.
Choosing a good portfolio is an important decision. You must 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 review 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:
- 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.
- 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 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 review 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 much 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?
Between 20% and 40% should be allocated to a Swiss Stock ETF. 10% is 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%, 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?
Swiss bonds have been in negative territory for several years in the past. However, as of 2023, Swiss bonds are once again interesting. It remains to be seen for how long, but it now makes to invest in bonds again.
Not everybody needs bonds in their portfolios. Indeed, this depends on your risk capacity. Personally, I do not own bonds. My portfolio is 100% stocks. But this does not mean it is a good portfolio for everybody. It is a good portfolio for me, with my risk capacity.
Using your risk capacity, you can choose your asset allocation. An asset allocation is the percentage of each asset in your portfolio. In our current, this will be the percentage of bonds and stocks.
Bonds are great for reducing volatility in your portfolio. They are especially useful in the early years of retirement when risks are higher for your portfolio.
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
If you do not want bonds but want to reduce volatility, there are several solutions to emulate bonds:
- 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.
- Invest in your second pillar. Most second pillar accounts offer around a 1% interest rate. And you will have some tax advantages as well. For me, this is the best alternative to Swiss bonds.
- 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 because you cannot invest a limitless amount. 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 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:
- The Total Expense Ratio (TER) of the fund is how much fees you will pay each year.
- The domicile of the fund is the country from which the ETF comes from.
- The size of the fund. You generally want large funds for smaller spreads and higher liquidity. But do not pay too much attention to the detail. A fund managing two billion dollars is not better than a fund managing a single billion. On the other hand, a fund managing 10 million is less attractive than one managing 200 million.
- The way the ETF is replicating the index. You only want to invest in funds with Physical Replication.
- The way the ETF is handling dividends. A fund can either distribute or accumulate dividends. In Switzerland, you will pay the same taxes for both, mostly a matter of preference. I prefer distributing funds to get the cash once I need it in retirement. And this cash will also help me with rebalancing.
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, remember 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:
- 80% World ETF
- 20% Swiss Stocks ETF
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 can access U.S. ETF. Then, we will see how to add bonds to the mix.
ETF Portfolio with U.S. ETFs
If you have access to U.S. ETFs, for instance, with Interactive Brokers, I recommend the following ETFs:
- Vanguard Total World (VT) for the World ETF with a TER of 0.07%
- iShares Core SPI (CHSPI) for the Swiss Stocks ETF with a TER of 0.10%
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, my allocation of 20% to Swiss Stocks would give this ETF Portfolio for Switzerland:
- 80% Vanguard Total World (VT)
- 20% iShares Core SPI (CHSPI)
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:
- Vanguard FTSE All-World UCITS ETF Distributing (VWRL) with a TER of 0.22%
- iShares Core SPI (CHSPI) for the Swiss Stocks ETF with a TER of 0.10%
With my allocation of 20% Swiss Stocks, this would give:
- 80% VWRL
- 20% CHSPI
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:
- The TER is about twice more expensive.
- You will lose 15% of the U.S. dividends because you will not profit from the double-taxation tax treaty since the funds are not in the United States. This difference is more significant than the first one. But this difference is often ignored by many investors.
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. ETFs and you do not want to change, then invest with European ETFs!
ETF Portfolio with bonds
Now, what is the best ETF portfolio with bonds for a Swiss investor?
We can take an example with a reasonable 20% bond allocation. This is a common bond allocation that does not decrease too much your portfolio returns and still reduces volatility.
There are two ways to integrate your bonds in your portfolio regarding your home bias (if you have any).
First, you could replace your home bias with the bonds part. Indeed, a Swiss bonds ETF would play a similar role to your home bias. In this case, you can opt for a portfolio with:
- 80% World ETF
- 20% Swiss Bonds ETF
If you want to combine Home Bias in stocks and Swiss bonds, you have to be careful about not having too much in Swiss stocks and bonds. So, you can either go 20% Swiss Stocks, 20% Swiss Bonds, and 60% World Stocks. If 40% allocated to Switzerland is too much for you, you could also opt for 10% Swiss Stocks, 20% Swiss Bonds, or 70% World Stocks.
Finally, I recommend iShares Swiss Domestic Government Bond 7-15 (CSBGC0) ETF. It has a 0.15% TER, manages about 250M CHF, and has been around for 20 years.
So, with US ETFs, this would give us this portfolio:
- 80% Vanguard Total World (VT)
- 20% iShares Swiss Domestic Government Bond 7-15 (CSBGC0)
And if you want to integrate a home bias ETF, you can bring back CHSPI into the mix to craft your perfect portfolio.
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 must 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? What does your portfolio look like?
Download this e-book and optimize your finances and save money by using the best financial services available in Switzerland!
Download The FREE e-bookRecommended reading
- More articles about Investing Fundamentals
- More articles about Investing
- The 6 Biggest Problems with Dividend Investing
- Value Investing: What is it? And should you do it?
- Keeping It Simple – Book Review
Hello Poor Swiss,
Thanks for your great blog, it has really helped me as I am new to investing. I have a couple of questions.
1) As a B permit resident of Switzerland I am taxed at source and do not file a tax return. In this case will I have any problems with the tax authorities if I buy ETFs through Degiro? I do not have any other income apart from my salary and less that 100k capital overall.
2) What do you think about Lyxor Core MSCI World (DR) UCITS ETF – Acc (LCUW) instead of the Vanguard FTSE All-World UCITS ETF Distributing (VWRL) you suggest? It has a lower TER so it seems a better option since I don’t have access to US ETFs.
Thanks!
Hi Ruthven,
1) I am not sure, I have never paid tax at source. However, my understanding is that as long as your income does not go over 120K, you do not have to do a full tax declaration and do not have to declare all your assets. But I would ask your local tax office to be sure.
2) If you like accumulating funds, it’s not a bad ETF. For me, it’s slightly small, but not too bad either.
hi Mr Swiss
Thank you for you very insightful articles.
i have a question please. I am a beginner investor trying to find the best balanced portfolio to focus on. i live in Switzerland and before I got the hang of investing I used to invest all my yearly bonus into my company shares as they also come with additional share incentives and because i didnt know much then i thought best to invest there than nothing
so now that I know a bit and would like to balance/diversify my investing. would it make sense to then keep my company shares as my home bias
and then invest the rest of my savings in
Vanguard Total World (VT)? when i look at my current numbers 30% of my savings are in my company shares iifi add up all my savings wwhichare 30% in my employer shares 34% in my 3rd pillar the other 36% is in cash a lumpsum i am looking ton invest in the stock market ideally the
Vanguard Total World (VT) o n trading platform. Does that make sense or should i divide my lumpsum cash savings into vanguard total world VT)and
iShares Core SPI (CHSPI) for the Swiss Stocks despite having company individual shares? what are your thoughts on this? thank you
Hi Jay,
I would avoid having too many shares in your own capacity. This is risky since you are also depending on them for your job. If you are working in an extra stable company, this may be interesting. But if you are working for a startup, I would be careful unless you want to gamble on the upside.
But some company shares can make sense.
Are you working for a Swiss company? The home bias is better in CHF and in a Swiss company.
VT would make sense indeed.
As for the percentages, it’s difficult to know. I would personally go lower than 36% in the company I am working for. Maybe 20% is more reasonable, but it depends on you and your company. A good investment in your third pillar also makes sense, as long as you a good third pillar.
And finally, it also depends on your investment horizon. If you are going to retire in 5 years, you probably don’t want 100% in stocks. And if you cannot handle a big downturn, you should be careful too.
hi Poor swiss thank you for the prompt response.
Yes I work for a swiss company within pharma. Some of the shares I have are blocked for a couple years to benefit from the extra shares incentive. So I wouldn’t be able to cash all of them out to diversify else where for the moment.
I guess my dilemma right now is whether i should invest my current lumpsum aprox 40K into the Vanguard Total World (VT)only keeping in mind that I have shares of a swiss company to cover my home bias? or if I should still split the 40K into VT and iShares Core SPI (CHSPI) for more Swiss Stocks?
Still have some time to retirement I am 32
Thank you for your two cents on this
These companies are generally stable, but there is still a risk in keeping a very high number of shares.
If you are investing for retirement, in 33 years, I would put the lump sum into VT. You can then decide later whether you want to have more Swiss home bias later on. Since you still have a job in Switzerland and some shares, you have a home bias somehow. And your second pillar is a kind of home bias as well.
Thank you! and thanks a lot for the great content! i am on consumption overload :)
Hello.
Thanks a lot for your work which is well described and written. “BRAVO !”
This message is about 1) simply buying an ETF or 2) digging into it contents and buy each share separately and avoiding the “big” components of the ETF (let say we don’t consider the commissions).
The concern is about the behavior of the ETF itself when one (or more) of its big component shows losses, it’s the full ETF which goes down !
If you buy the components separately, you don’t face this problem, right ?
May i ask you to give your feeling about that point ?
Kind regard.
πR
Hi Pierre,
I don’t understand. If you replicate the index yourself, you will be in the same situation as the ETF no? Let’s say AAPL makes 10% of your index and goes down to zero, you will lose 10% of your money regardless of whether you hold the individual shares of AAPL or the ETF itself.
There should be no difference in performance (apart from fees).
with the current gap between US/EU and swiss inflation rates combined with BNS commitment to keep exchange rate stable, should not be good to hold inflation linked bond in USD or EUR?
Hi,
I think people should protect against local inflation, but not against foreign inflation.
We also don’t know whether inflation is here to stay. Personally, I’d rather not change anything in my strategy for short term events.
Dear Poor Swiss,
Thank you for this informative article. I have some questions:
1. If you invest in VT and are a Swiss citizen or tax resident, you pay 15% dividend tax, correct?
2. If you invest in VWRL, don’t you avoid the 15% dividend tax altogether since it is not domiciled in the US? In which case, I am not sure which is cheaper.
3. If I buy either through my recently-opened Interactive Brokers account, do I have to first convert my CHF to USD within my IB account and then purchase, or does the conversion happen automatically? I am not sure what fees IB charges and if they offer a good exchange rate. An alternative is transferring through a currency conversion service like Wise, in which case I would transfer my CHF to Wise, convert to USD and transfer USD to IB. Wise would charge me 0.43% for this but I would get the best exchange rate.
I look forward to your reply!
Best,
Jordan
Hi Jordan,
1) that’s correct, if you filled up a W8-BEN form with your broker
2) No, that’s incorrect. The 15% fee will be withdrawn by the IRS in the United States before the money reaches the fund itself. So, 15% of all US dividends are lost. So, VT is cheaper.
3) No conversion happens automatically. Each currency conversion costs 2 USD and they have an excellent exchange rate. Don’t bother going through another service, convert with IB!
Hi,
I have a practical question. How and why have you selected this particular world fund?
Is particular choice to have it as simple as possible, i.e. just one fund?
Vanguard Total World is ~65% US stocks, and ~15% Europe. You already have some of Europe covered with Switzerland.
OTOH, Vanguard Total World is noticeably worse than even S&P500.
So why not take 3-4 funds, lets say one S&P500 ETF, one DAX ETF, one emerging markets ETF and one Asian markets ETF and achieve much better performance than VT fund?
For US, I would bias it more to tech (it’s a bit more risky but even on a longer run like last 30 years NASDAQ is so much more performant than S&P500 that it more than justifies the risk), so take a combined S&P500 and NASDAQ ETFs.
Thanks
Hi,
If you take 3-4 funds, you will not achieve better performance than VT if you use the same ratios. It’s much easier to use a single fund with well-chosen ratios rather than do it yourself with more funds.
Every bias you take is a bias, it means it is a gamble that some sector or country will perform better than in the future, which you simply can’t know. Looking at the past performance is practically meaningless.
Hello Mr. Poor Swiss,
thank you for this article! I found it very insightful!
Just a couple questions… About investing in only European ETFs, I noticed that the VWRL is available on different exchanges. Any advice from you about how to choose which one we should invest in from the perspective of a Swiss investor (in combination with CHSPI)?
If I choose the Swiss exchange (even if the volume is pretty small), will the currency be in CHF or still in USD (as says the ETF name)?
Regards,
Warner
Hi Warner,
Yes, this is very confusing problem with European ETFs.
In any case, there is only a single VRWRL fund and its currency is always USD. However, it’s being listed under several exchanges and currencies.
In the end, it makes very little difference. My rule is:
* Always take a listing in the same currency as the fund’s currency (USD for VWRL)
* Always take a listing in the same region as the fund (Europe for VWRL)
* Always take the listing with the highest volume as the last criteria
Other considerations are depending on your broker. Sometimes, it’s cheaper to buy on some stock exchanges than others. And sometimes, it may be interesting to avoid the currency transaction fees of your broker.
Thank you, Mr. Poor Swiss!
The ETFs listed in Italy and in Switzerland are pretty small and I don’t want to convert my money in British Pounds to invest in the VWRL listed in London, which is the biggest one in volume. So, if I choose to invest in VWRL I’ll probably take Amsterdam since I have some money in Euros and I won’t need to convert them.
The one in Amsterdam is okay. But keep in mind that you are going to convert the money anyway since VWRL is in USD. So in the end, you will be exposed to currency risk with the USD.
Thank you again, Mr. The Poor Swiss!
In June I started my 3rd pillar with Finpension investing 99% in foreign stocks with a customised portfolio (and 1% in cash), after I had read many articles form your blog, Mr Rip’s one and an insightful discussion on the Mustachian Post.
But, I’m pretty worried about the currency risk and now I want to reduce this risk investing a small part of my IB portfolio in domestic stocks. In my opinion, a 25% as domestic bias should be enough for me. And I want to invest the other part in all world stocks, like in VWRL or VT, creating a simple and diversified portfolio.
Hi Warner,
Thanks for sharing :)
That makes sense. It’s important to have some home bias and not too much foreign currencies for your risk capacity.
I also have 20% of my IB portfolio in CHSPI which is an index for Swiss stocks, in CHF.
And my house is valued in CHF, so a large part of my total net worth is currently in CHF.
Dear Mr. Poorswiss,
Would you consider adding a small part to a long term portfolio others ETF like for example the Vanguard Information Technology ETF (VGT) that could potentially offers higher returns? Something Like:
VT 60%
VGT 20%
CHSPI 20%
Thank you so much for the excellent information
Hi Manu,
For me, definitely not, since I work in Tech, I am already overweight.
In general, I would not recommend it. It offers high returns right now, but the tech sector may be inflated. I believe that the market is efficient enough to weigh down properly the different sectors.
Now, if you want to take higher risks, this is an interesting bet. But people need to realize that this is increasing the risks in their portfolio and making it less diversified. I think that 10% is already interesting as fun money but 20% is probably too much for most people.
I also work in tech and it makes complete sense what you are saying. Thanks again for taking the time to reply, that’s amazing. Learning every time something from you!
Have a great weekend
Greetings PS and a BIG thank you for your wonderful blog and all the amazing and useful information you are sharing with us. I am new in investing (also trying some active options trading), I am trying (hard) to familiarize myself with IB and I live in Greece. I have three short questions regarding IB and ETFs. I would be most obliged if you could comment on them.
1. It is my understanding (please correct me if I am wrong) that several ETFs are listed in various European Exchanges. If – for example – someone visits https://www.justetf.com/en/etf-profile.html?isin=DE000ETF7037#listing can see that Lyxor Portfolio Strategy Offensive UCITS ETF is listed in Swiss, XETRA (Ibis?) and Stuttgart Stock Exchanges. Are there any criteria to choose one exchange over another? Are all listings available from Interactive Brokers interface?
2. There is a Greek article that praises Multi-asset ETFs ( https://www.justetf.com/en/how-to/invest-in-multi-asset-etfs.html ) as the best one-size-fits-all ETF portfolio solution! What is your opinion? Any particular comments on the specific list above?
3. I tried to buy one ETF from IB that I chose from justetf list. So I had to find its ticker symbol, which I did under Listings. When I entered that symbol (e.g. F703) inside IB the UCITS part of the name is not shown. Can I be sure that I am actually buying the exact same ETF with the correct ISIN (DE000ETF7037) number?
I hope I didn’t take advantage of your time and I thank you in advance for your help.
Kind Regards
Ioannis
Hi Ioannis,
Thanks for your kind words :)
1) Yes, that’s correct, most European ETFs are listed on several exchanges. This is confusing many investors. Normally, you should be able to access them all from IB, you just have to have the permissions for each of the stock exchanges you want. I recommend using the one with the largest volume that is in the currency of the fund. But all things considered, it makes little difference.
2) It seems to be similar to what target retirement funds are doing. You can read the article to get my comments :)
3) I believe you can search by ISIN directly with IB. Have you tried that? This should be safer to make sure you have what you want.
Hi PS!
Are there any benefits to invest via a broker account and not directly through the vanguard site?
Best,
Giacomo
Hi Giacomo,
Yes and no :)
Yes, if you are in Switzerland since we can’t go directly through Vanguard.
No, if you live in a country with direct access to the good Vanguard US funds or if you can’t invest in Vanguard US Funds and ETFs.