Investing in Swiss Exchange-Traded Funds (EFTs)
In Switzerland, ETFs are securities which work similarly to index funds and are also able to be traded like common stocks. The main reason for ETFs to exist is to allow investors to trade a large number of their securities in a simple and efficient single transaction. This is the main reason why ETFs are considered stocks which are diversified with mutual funds.
A perk of Swiss ETFs is that they present investors with a diverse trading portfolio as well as provide some exposure to investors. Some of the more popular ETF types are equity ETFs, currency ETFs and gold funds.
If you require more information or an in-depth understanding of Swiss ETFs you should feel free to contact or business consultants.
What are the advantages of Swiss ETFs?
A major benefit to Switzerland’s ETFs is that they are able to be recognised as single transactions. They are generally described as indexes which are linked to a single area of the market and can be purchased on the Swiss market in a single transaction, meaning that an investor is able to purchase a portfolio rather than stocks.
With the above in mind, a commission on the ETF purchase will be smaller as the purchase is singular and not like an index purchase which contains a larger number of diverse transactions. Also, ETFs are not subject to load fees, and on top of this, managing fees are often far lower than mutual funds fees.
Capital taxation on Swiss ETFs is also lower than mutual funds as trades are differently structured and have an almost entirely different composition. This means ETFs are taxed just one time, which is when the entire fund is sold and this makes an ETF far more tax efficient and seamless.
The pricing of EFTs changes throughout the day and can constantly change as the ETF price is constantly updated and changed based on the market. In short, an ETF is similar to an equity stock sitting on the Swiss stock market.
In Switzerland, a business or company who is selling an ETF is required to preset the assets within the ETF on a daily basis due to transparency requirements. Mutual funds are differently presented and are often updated at random periods of time.
Additionally, EFTs are also required to adhere to an index and must present a number of updates through their time on a market and decreasing management fees. Simply, an ETF has a structure that is uncomplicated and easy to get a grasp of, and on top of this, the costs and tax on EFTs are also simple and normally fairly low.
Are there any disadvantages of the Swiss EFTs?
Although mainly filled with positives, there are also a few disadvantages to EFTs in Switzerland. The first main risk, or disadvantage, is that an ETF, in some circumstances, may not be the most suitable option for an investor and therefore other options should be looked at. On top of this, there are currently no capital guarantees on the ETFs, so it is unprotected and its value can go up or down and thus leave an investor completely exposed to these changes.
Investing in EFTs in Switzerland requires a fair amount of research to be completed, as well as an understanding of the stock and investment markets. We have business and investment consultants who are able to assist with this.