Interview of Richard Toolen – CEO of Investart
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Today, I have the privilege of interviewing Richard Toolen, the CEO of Investart. Investart is a new investing service in Switzerland.
I am very intrigued by this new service. They are offering investment in Exchange Traded Funds (ETFs) in Switzerland. And they are offering both a custom portfolio and a managed portfolio. Moreover, they are offering more than 80 ETFs, all passive investing ETFs.
Is it too good to be true? What better way to find out than interviewing the CEO and founder of Investart, Richard Toolen. I asked him many questions, and I am sharing his answers with you.
June 2021 Update: A 12 CHF per month fee was introduced, read my Review of Investart for more details.
1. What can you tell us about yourself?
I have worked in Finance for over 25 years, starting as a trader in Frankfurt in 1994. After working for several years as an employee, I left banking with some colleagues to set up entrepreneurial endeavors of our own.
Investart is an extension of these efforts. I wish to make investing easy and fun for Swiss retail investors and allow them to use their own ideas to inspire themselves, while we help manage the risks. Hopefully, our enabling philosophy will assist them in doing so, and my successes as well as many years of experience in the financial markets (including during the crises of 1997, 2000, 2008 and 2020) are reflected in the Investart platform.
2. What is Investart?
Investart is an online investing service. It allows people to realize their own investment ideas, or else benefit from our expertise and let us compose and manage their investment portfolios. We offer investments into regular (not crypto) asset classes implemented via ETFs.
3. Why did you found Investart?
There is a large number of people who have some savings and would like to invest them. However, many of them are beginners in the world of investing: they do not know how to open a brokerage account, what to invest into, which investment instruments to select, how to find them, how to place a trade. And most importantly: where to start. Investart was founded to help such people achieve their financial goals.
4. What makes Investart great?
What we had in mind when starting to build Investart was an intuitive, fool-proof, and self-explanatory platform. Something that can be used by total beginners in the area of investing. If we have achieved this goal (and our clients should tell us this) – then this is the main feature that makes Investart great.
5. Is it really free?
June 2021 Update: A 12 CHF per month fee was introduced
Online investing is really free: we do not charge any commissions. Our clients do not pay anything for trading, custody, re-balancing, reporting, servicing, no third-party commissions, no VAT, or transaction duties. Check out also our pricing page.
Where we make money is extra value-adding services such as personal financial consultations, wealth planning, and pension planning. These are offered on a one-to-one basis to our affluent clients. In the future, we plan to add some additional features to the platform, such as risk/return optimization of the composed portfolios, which will be subject to charges.
6. What platform are you using?
At the moment Investart is an internet (browser-based) application, which works on any desktop and mobile device. It uses 128-bit internet encryption and 2-factor authentication technologies to ensure data security. We are particularly proud to be one of the first financial companies in Switzerland to offer account opening fully online (and we avoided video-identification in favor of much easier and fun selfie-identification).
We plan to create a mobile app version of the platform and will start working on it in the second half of 2021.
7. In what kind of instruments is Investart investing and why?
We offer investments in ETFs.
Picking individual stocks might result in large financial losses due to wrong title selection (so-called “unsystematic risk”). Experienced investors know this and reduce this risk by ensuring proper diversification. Our main target group is beginners, and ETFs, which are normally diversified investments (there are many stocks or bonds in each ETF), are more suitable for them. Our platform can technically support investing also into single stocks and bonds. But for the time being, we will limit our offering to ETFs.
7. Can you give us an example of a portfolio with Investart?
Here is an example of a CHF-denominated portfolio:
- 5% in Cash
- 28% in Swiss corporate bonds (Investment Grade)
- 9.5% in Global High-Yield bonds
- 13.5% in Swiss mid-cap stocks
- 15.5% in Swiss high-dividend stocks
- 14.5% in US low-volatility stocks
- 9% in Swiss real estate companies
- 5% in Gold.
8. Can we see the instruments being used for each of the portfolios?
Yes, you can see the complete breakdown of your portfolios. You can also click the “i” button of each Investment to find detailed information about it, including which ETF is used for the investment.
9. Can I choose the portfolio myself?
100% customization is possible.
You can build your portfolio fully from scratch yourself. Or you can take an optimized portfolio, proposed and tailored to your personal situation by Investart, and adjust it any way you like by changing the proportions, adding and removing instruments.
10. Is Investart for everybody?
Absolutely. We have talked about Investart being intended primarily for beginners, however, we have noticed recently that many experienced investors are signing up to the platform.
11. Is Investart a good fit for passive investors?
It is a perfect fit since we offer investing via ETFs.
12. Why are you focusing on currency-hedged instruments?
Our platform is intended mainly for Swiss residents, whose main currency is CHF. Imagine you selected a CHF-denominated ETF, which invests in US stocks. After some time US stocks gain 5%, but USD falls 7% against CHF. It turns out that you lost 2%, despite US stocks rising. To avoid such situations, we pick CHF currency-hedged ETFs whenever possible.
Unfortunately not all ETFs have currency-hedged share classes, so there is also plenty to choose from for those who want to keep the currency risk (we have recently added a “currency hedged” indicator to all products).
13. Any other cool plans for the future?
We plan to develop and launch a whole range of new cool “Premium” features during this year and early next year, and will be happy to reveal them once they are ready!
14. Anything else you would like to add?
An important point: at the moment we limit the number of new clients to 1’000 per year. This helps us keep the costs down and pass the cost savings to clients in the form of zero commissions. Please note that if you open an account and do not fund it during the following 1 month (required minimum: CHF 2’000), it will be removed to make space for new accounts.
So, secure your account now. And thank you for having me here, it’s been a pleasure answering your questions!
Mr. The Poor Swiss: Thanks a lot to Richard for answering all my questions!
It was great that learn from the CEO of Investart. I am really intrigued by the service they are offering.
Investart is not really a robo-advisor, and it is not really a broker, but it can be a little of both depending on how you are using it. For me, it seems like it could be a great way for investors to start investing, with an extremely low price
For more information, I have written a full review of Investart and started investing myself.
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Hi & thanks for this interesting option!
But I am confused. I guess one of the main reasons for a Swiss investor to use a Swiss platform would be to be protected by the Swiss banking laws. But since Investart is opening a personal account with IB on behalf of the client, I strongly doubt that the client is protected by said banking laws. Then welcome to the US&A…
Or is there any tangible difference between me directly opening an IB account and Investart opening one in my name?
Hi Sam,
One difference would be that investart is regulated in Switzerland contrary to IB.
But it’s true that in terms of protection, it makes no difference. It’s just much easier and a little cheaper.
And you still have a contact in Switzerland.
Thanks for stopping by!
Hi
I am very impressed by investarts pricing model offering investing services for free of charge.
From the first view it looked like the perfect fit for my kids savings plan.
My plan was to create a simple, worldwide diversified stock portfolio (70% world / 30 emerging markets) with of only 2 ETFs (keep it simple).
On investart you can choose the „Worldwide stocks“ (ISIN IE00B8BVCK12) and the „Emerging markets companies“ (ISIN IE00B4L5YC18) ETF to implement this.
For worldwide stocks, they only offer a CHF hedged ETF (ISIN IE00B8BVCK12) whose TER=0.55 is quite high in comparison other, not hedged ETFs tracking the same index. E.g. the iShares Core MSCI World UCITS ETF USD (Acc), ISIN IE00B4L5Y983 has a TER of 0.2 only.
Due the high diversification in my portfolio I doubt that currency hedging is worth the additional costs. See also https://www.gerd-kommer-invest.de/wann-ist-waehrungsabsicherung-sinnvoll/. Maybe I am wrong. I must admit that I am newbie in terms of stock investing.
Further I don’t understand why the „Emerging market companies“ ETF (ISIN IE00B4L5YC18) has a TER of 0.68 on investart, but a TER of 0.18 on justETF.com. Thats a significant difference! And how is it possible at all that the same ETF has different TER?!? Any ideas?
I am looking forward to you investart review! You are creating very valuable content, thanks a lot!
Hi Chris,
Thanks a lot for sharing your experience with Investart!
I agree that currency hedging is not for everybody. You could replace the World ETF with the S&P500 ETF. You would lose in diversification, but you would save on TER and you could have USD with no-hedging. With globalization, it’s not that bad to have only S&P500, especially if you had emerging markets to it.
As for the emerging markets ETF, it could be a typo? I do not know.
Thanks for stopping by!
Hi Chris
Thank you very much for pointing out the TER for EM companies, really appreciate it! It used to be 0.68 but has been lowered since. We have updated the TER in Investart.
Regarding hedged vs. un-hedged: please do not get fixated on the TER. There are many other factors to consider when comparing ETFs, e.g. tracking error, liquidity, etc. In this particular case, I will argue that the CHF hedged ETF is actually way cheaper, and here is why:
– Hedging USD into CHF does not cost anything but actually produces a profit of over 1% p.a. (USD/CHF forward margin is 96 pps now), which more than compensates the 0.35% TER difference.
– If you live in Switzerland then your costs are in CHF. US dollar lost 8.6% vs. CHF in the last 12 months. This means you lost more than half of what you earned on the MSCI World ETF, if you invested in USD. And you didn’t earn the 1% from hedging.
Best regards
Richard (ceo, investart)
Hi Richard
Thanks for clarification, I really appreciate it!
Nevertheless, I am still not fully convinced by the hedging approach in my particular case. What actually or in the last 12 months made sense might be a disadvantage in the non predictable future. As a long time investor (15+ years) I still favor a not hedged world ETF with a lower TER.
Are there any plans to offer an unheged (all) world ETF in the near future?
Thanks in advance for your feedback!
Hello, thanks for the interview, and for making us discover a new swiss trading platform.
I just opened an account with them. It is definitely not as smooth as, say, Truewealth. For example, I wanted to opt-out being considered qualified investor, and they said it was not possible, despite the fact it was clearly written on the documents I signed. Finally, they let me opt-out.
Then for some reason I had to log into IB, and accept some stuff. Well, no big deal, but an extra step.
You can start with a demo account, but when you switch to a real one, or add a real one, the demo is still there, and you don’t really see the total real amount of money you have. It feels a bit clumsy. I understand that for some people having more than one portfolio is great, but I guess the majority would be ok with keeping things simple: just one portfolio.
Positive: super easy to create a portolio, just drag and drop tiles
I like that the ETFs have simple names like “electric car companies” or “clean energy”, so it’s easy to invest in the sector you want to, without having to search by yourself.
No fees.
All in all, I’d say it’s a promising new company, that needs to polish a bit its user interface, as well as correct some bugs that appear here and there.
Hi Greg,
Thanks a lot for your feedback. This is extremely valuable.
As you said, it makes sense at the beginning that some things need polishing. But new users need to be aware of that.
I will try creating an account to make my review of investart. We will see if anything changed!
Thanks!
Hi!
What are the implication of being a qualified investor?
Thanks!
Very interesting, looking forward for a review and comparison with alternative services before investing with it. It sounds a bit strange to me that they limit to 1000 customers per year. Another strange thing is that there is a kind of bug on their website wen you plat the portfolio performance: it show 2016 on the time scale.
In any case, congratulation for this reference website and interesting article!
Hi Marco,
Thanks for your kind words :)
It’s indeed strange, but they are a very young service. And a lot of online services have scaled way too fast and had horrible customer service as a result. It’s better to take it slow and test the market first, no? But maybe 1000 is too little? I really do not know.
Thanks for stopping by!
Hi Marco
Thank you for your question. We limit the number of new clients to 1’000 a year for the time being because it helps us keep the costs down and pass the cost savings to you in the form of zero commissions.
Best regards
Richard (ceo investart)
Looking forward to see your review
I signed up and had a look at their ETF range for Switzerland. For large cap, the preferred CHSPI (iShares Core SPI) is not available. Instead SMICHA with TER 0.2 is the only choice. Similarly for Midcap CSSMIM with a higher TER of 0.45 is the only choice. I like the idea and if they add the cheapest TER ETF, I will use them.
Hi Key,
Thanks for trying and reporting back to us :)
It would indeed be good if they had cheap ETFs in their offer. I will be sure to look into the offer of ETFs for my review of Investart.
I was thinking it would be good to switch my CHSPI investments to Investart, but I do not want to switch to a more expensive TER ETF.
Thanks for stopping by!
Hi Kay
Thank you for your feedback, really appreciate it! We have added CHSPI, see the Investment labelled “Swiss companies”.
Regarding Swiss mid-caps: there are only two viable ETFs on SMIM, by iShares and UBS. The UBS ETF has indeed a lower TER of 0.25% but also a higher tracking error, so in the end both ETFs produce the same return, their performance difference is in the range of only 1-3 bps p.a. We therefore do not see any reason to replace the existing iShares ETF with a cheaper but a worse performing alternative.
Best regards
Richard (ceo of investart)
Excellent news about CHSPI!
Thanks for stopping by Richard!
Thanks for the detailed explanation. I will purchase CHSPI and some ETFs.
Hi, thanks for sharing about new entrants on the Swiss market. Since I discovered your blog, I’ve spent hours reading.
I assume they must be regulated by FINMA, correct? Do you know which bank they use?
Thanks.
Hi Ozana,
You are welcome :)
Yes, they are regulated, probably by FINMA (not entirely sure on that). They mention that they have FINMA-compliant server, but I do not know if they are fully regulated under FINMA.
They are using Interactive Brokers for the stocks and cash.
Thanks for stopping by!
Hi Mr. The Poor Swiss,
Than you for this interview.
Could have been useful for us, readers, to have more information regarding the regulations applicable to Investart.
A new cheap investment solution is nice, knowing that our money is safe is important too.
The information on their regulatory body are available on their website (https://www.investart.ch/about).
They are not regulated directly by FINMA, but are a member of VQF (https://www.vqf.ch/en/), an association recognised by FINMA and offering various services to financial intermediaries.
Unfortunately, it doesn’t seem that VQF publishes a list of its members on their website. At least, I was not able to find it.
I wonder how Investart can guarantee the CHF 100’000 per account while the cash is held with a third party broker outside of Switzerland (Interactive Brokers) who itself deposits the money of its clients with third party banks (https://www.interactivebrokers.co.uk/en/index.php?f=39138).
Is a special guarantee in place with a Swiss bank ? through its regulatory body, VQF ?
Hi Guillaume,
As mentioned in the article, an in-depth review article will follow this interview with more details.
The money is hold by IB UK, which is not regulated by FINMA, but which is highly regulated in England. And they have a higher protection than most Swiss banks. However, it is indeed weird that they mention this 100K protection limit that resembles esisuisse but would not apply to money held in IB.
I will sure to delve deeper in the subject for the review of investart.
Thanks for stopping by!
Hi
I am using Investart, they offer also US ETFs (their shares that are traded on European exchanges).
It is really free, no custody fees, no brokerage, also no Swiss stamp duty. They have Swiss franc, Euro and Dollar ETFs, but the focus is clearly on Swiss franc products.
The range is around 80 ETFs, but (unless you really must by all means invest in e.g. Korean small-caps) the range generally suits my needs, it covers really cool themes.
Thank you! David
Hi David,
Are you sure they are U.S. ETFs? And not ETFs of American shares? Could you give us an example?
Their CEO told me that they do not offer U.S. ETFs. This could make a large difference if they do.
Thanks for sharing your thoughts on this service. This is very interesting!
Hi
See, for example, iShares MSCI Brazil (ticker EWZ). It’s a US ETF managed by iShares. In Investart I found the Irish UCITS version of it under “Brazilian companies”, also managed by iShares, traded in US dollars but on the Swiss stock exchange. It is the same ETF, just more “europe-friendly” as it’s traded here.
Hi David,
Actually, the UCITS ETF is not a U.S. ETF. As you said, it’s an Irish ETF. This is significantly less efficient for dividends.
They are not the same ETF, they are very different ETF investing in the same shares.
Thanks for stopping by!
Hi
Are you sure? May I make the opposite claim: Irish ETFs are better than US ETF for dividends. US dividends are subject to automatic source tax, usually 35%. With Irish ETF and Interactive Brokers (the account is in the UK) there is 0% source tax.
So, as a Swiss resident, with Irish ETF I only have to calculate and pay the respective Swiss income tax on dividends. With US ETFs I pay tax to the US government and to the Cantonal tax authority, then spend 2 years trying to claim the US tax back. So I definitely prefer the Irish or Luxembourg share classes of US ETFs.
Hi David,
Yes, I am actually entirely sure.
U.S. Dividends are not subject to automatic source tax by Switzerland, so, there is 0% withholding from Switzeralnd. But they will be taxed as income like any dividends.
U.S. Dividends are automatically taxed at source at 30% for foreign investors and 15% for U.S. investors. However, since we have a tax treaty with the U.S., Swiss investors only pay 15% of these dividends. Moreover, you can reclaim these 15% in your tax declaration. So, you end up losing 0% in dividends.
With an Irish ETF, it’s quite different. Again, the dividends you receive are not taxed at source by Switzerland.
However, the dividends by U.S. companies are taxed at source by the United States at 15% (another tax treaty here). And this 15% are lost for you since they are lost even before they reach the Irish ETF. So, it’s not true that there is a 0% source tax for Irish ETF.
Since the United States stocks make up 50% of the world stock market, losing 15% of the U.S. dividends is significant.
Now, Irish ETFs are good, much better than most other European ETFs. However, they are not as good as U.S. ETFs. On the other hand, they are slightly simpler to access and use. So, it’s up to the investor to decide to which level he/she wants to optimize its holdings.
Hello Poor Swiss,
Investart sounds too good to be true. No fees, really?
For ETFs, how does this compare with Interactive Brokers?
The CEO mentioned: “we pick CHF currency-hedged ETFs whenever possible”, do they also have foreign currency ETFs such as VT that you reccommend.
Thanks again for this great interview!
Hi Sean,
The panel of ETFs is more limited than at IB and they do not offer access to U.S. ETFs. They would be better than a Swiss broker if you can find your ETFs. But they are still inferior to IB.
However, it is much simpler than investing at IB.
They have some foreign currencies ETF, but not nearly as many as CHF-hedged ETFs.
Thanks for stopping by!
Hi,
Great interview and very interesting product. I notice there is no Federal stamp duty to pay. Does that mean they are not based in Switzerland or use a foreign broker?
Since they offer investments in US ETF for free, wouldn’t they be the best investment platform in Switzerland as opposed to Interactive Broker that charges a custody fee?
I would be interested to have your opinion on that topic.
Thanks Rafael
Hi Rafael,
Thanks :)
They are using Interactive Brokers under the hood, so no Swiss Stamp Tax :)
However, they unfortunately do not give you access to U.S. ETFs. I have asked Richard about that and he told me that U.S. ETFs are not available for retail to Swiss investors.
So, the optimal investing way would still be IB and U.S. ETFs.
But it remains an excellent option, much better than other Swiss brokers.
Also, keep in mind that they “only” offer a selection of ETFs, not the entire panel.
I will do a review in the coming months and I will definitely learn more about this service.
Thanks for stopping by!