Finpension Global Market ETF (VT - VWRL Clone)

[gtdispomed9093]

Hey everyone,

I have been looking into the new Finpension Wealth management product.

My investment strategy is "Buy and Hold". An initial large lump sum and then yearly smaller deposits.

I am well aware after reading blogs and posts on the internet of the general consensus that the best option financially would be to use IBKR and "VT and Chill" or some similar world ETF.

However, I would like to:

• Avoid the complexity (and possible mistakes) of IBKR since I am a non-expert in finance. I have created a demo account with them and found the tools overwhelming for a novice like me
• Avoid US-Domicile ETFs for issues with US-Estate Tax in case of death. I know that there is a Swiss-US agreement, however since I am a Swiss-Resident but EU-citizen I am not sure of the specifics and what applies in my case. Even if this is not a problem, my heirs would still need to report everything to IRS in a timely matter with a certain form that might be tedious and expensive
• Use a Swiss provider/broker for optimised Tax-paperwork and (hopefully) better customer support.

I therefore accept that for my requirements and some other benefits of the Finpension product I need to pay the fees requested.

___________________________________________________________________________________________

With all this in mind my idea was to create a VT - VWRL "clone" global portfolio using the ETFs available through Finpension.

Here's what I did and the results:

Analysis of VT ETF:

• Regional Allocation:
  • North America: ~60%
  • Europe: ~18%
  • Asia Pacific: ~12%
  • Emerging Markets: ~10%
• Sector Allocation:
  • Technology: ~22%
  • Financials: ~15%
  • Healthcare: ~13%
  • Others: Consumer Discretionary, Industrials, etc.

Analysis of VWRL ETF:

• Regional Allocation:
  • North America: ~61.6%
  • Europe: ~18.1%
  • Asia Pacific: ~11.4%
  • Emerging Markets: ~8.9%
• Sector Allocation:
  • Technology: 26.0%
  • Financials: 14.6%
  • Consumer Discretionary: 13.7%
  • Industrials: 13.2%
  • Healthcare: 10.8%
  • Consumer Staples: 5.5%
  • Energy: 4.8%
  • Basic Materials: 3.5%
  • Utilities: 2.9%
  • Telecommunications: 2.7%
  • Real Estate: 2.3%

___________________________________________________________________________________________

Finpension Suggested Portfolio at 100% Global Equity:

Fund Name
Strategy (%)

iShares Core S&P 500 UCITS ETF
66.0

HSBC EURO STOXX 50 UCITS ETF EUR
10.0

iShares Core MSCI EM IMI UCITS ETF USD (Acc)
10.0

Xtrackers MSCI Japan UCITS ETF 1C
6.0

Vanguard FTSE 100 UCITS ETF
3.0

iShares Core SPI® ETF (CH) CHF (Dist)
2.0

HSBC MSCI PACIFIC ex JAPAN UCITS ETF
2.0

Adjusted Portfolio to Match VT and VWRL: I slightly adjusted the Finpension portfolio to better match VT’s and VWRL’s global diversification:

Region
ETF
Allocation (%)

North America
iShares Core S&P 500 UCITS ETF
62.0

Europe
HSBC EURO STOXX 50 UCITS ETF EUR
12.0


Vanguard FTSE 100 UCITS ETF
3.0


iShares Core SPI® ETF (CH) CHF (Dist)
2.0

Asia Pacific
Xtrackers MSCI Japan UCITS ETF 1C
7.0


HSBC MSCI PACIFIC ex JAPAN UCITS ETF
3.0

Emerging Markets
iShares Core MSCI EM IMI UCITS ETF USD (Acc)
10.0

Cash
-
1.0

___________________________________________________________________________________________

Calculated TER: Then I went ahead and calculated the Total Expense Ratio (TER) for the adjusted portfolio:

1. iShares Core S&P 500 UCITS ETF: (0.62 * 0.07 = 0.0434)
2. HSBC EURO STOXX 50 UCITS ETF EUR: (0.12 * 0.05 = 0.006)
3. Vanguard FTSE 100 UCITS ETF: (0.03 * 0.09 = 0.0027)
4. iShares Core SPI® ETF (CH) CHF (Dist): (0.02 * 0.10 = 0.002)
5. Xtrackers MSCI Japan UCITS ETF 1C: (0.07 * 0.12 = 0.0084)
6. HSBC MSCI PACIFIC ex JAPAN UCITS ETF: (0.03 * 0.15 = 0.0045)
7. iShares Core MSCI EM IMI UCITS ETF USD (Acc): (0.10 * 0.18 = 0.018)

Total Weighted TER = (0.0434 + 0.006 + 0.0027 + 0.002 + 0.0084 + 0.0045 + 0.018 = 0.085)

• Total Weighted TER: 0.085%

___________________________________________________________________________________________

Sector Allocation for Finpension Global Market ETF: I then calculated sector allocation. Here’s an example of my calculations for the Technology sector:

1. iShares Core S&P 500 UCITS ETF: (0.62 * 27.6% = 17.112%)
2. HSBC EURO STOXX 50 UCITS ETF: (0.12 * 16.86% = 2.0232%)
3. iShares Core MSCI EM IMI UCITS ETF: (0.10 * 20.6% = 2.06%)
4. Xtrackers MSCI Japan UCITS ETF: (0.07 * 15.47% = 1.0829%)
5. Vanguard FTSE 100 UCITS ETF: (0.03 * 1.0% = 0.03%)
6. iShares Core SPI® ETF (CH): (0.02 * 2.03% = 0.0406%)
7. HSBC MSCI PACIFIC ex JAPAN UCITS ETF: (0.03 * 1.25% = 0.0375%)

Total weighted allocation for Technology: (17.112 + 2.0232 + 2.06 + 1.0829 + 0.03 + 0.0406 + 0.0375 = 23.3862%)

I repeated this process for each sector to get the aggregate allocation which is the following:

Sector
Weighted Allocation (%)

Information Technology
23.44

Financials
14.80

Healthcare
10.39

Consumer Discretionary
12.31

Industrials
10.21

Communication Services
6.80

Consumer Staples
6.20

Energy
4.30

Utilities
2.52

Real Estate
2.61

Materials
4.13

___________________________________________________________________________________________

Number of Stocks for Finpension Global Market ETF: Given the provided ETF holdings:

1. iShares Core S&P 500 UCITS ETF: 503 stocks
2. HSBC EURO STOXX 50 UCITS ETF: 50 stocks
3. iShares Core MSCI EM IMI UCITS ETF: 2,590 stocks
4. Xtrackers MSCI Japan UCITS ETF: 222 stocks
5. Vanguard FTSE 100 UCITS ETF: 102 stocks
6. iShares Core SPI® ETF (CH): 210 stocks
7. HSBC MSCI PACIFIC ex JAPAN UCITS ETF: 115 stocks

Summing these without adjusting for overlap: 3,792 stocks

To estimate the unique stocks, assuming a 20% overlap (not sure if this number if correct):

• Unique stocks: (3,792 * 0.8 = 3,034)

___________________________________________________________________________________________

Summary:

Attribute
Finpension Global Market ETF
VT ETF
VWRL ETF
Total Expense Ratio (TER)
0.085%
0.07%
0.22%
Total Number of Stocks
~3,034
~9,400
3,666
Regional Allocation
North America
62%
~60%
61.6%

Europe
17%
~18%
18.1%

Asia Pacific
10%
~12%
11.4%

Emerging Markets
10%
~10%
8.9%
Sector Allocation
Information Technology
23.44%
22.0%
26.0%

Financials
14.80%
15.0%
14.6%

Healthcare
10.39%
13.0%
10.8%

Consumer Discretionary
12.31%
12.0%
13.7%

Industrials
10.21%
11.0%
13.2%

Communication Services
6.80%
8.2%
2.7%

Consumer Staples
6.20%
6.8%
5.5%

Energy
4.30%
4.6%
4.8%

Utilities
2.52%
3.0%
2.9%

Real Estate
2.61%
2.8%
2.3%

Materials
4.13%
2.9%
3.5%

I would love to hear your thoughts on this adjusted portfolio. Obviously it is much closer to VWRL than VT with a lower TER. Any thoughts, suggestions or improvements?

Thanks in advance for your input!

 

[s1a1om]

@gtdispomed9093 You have way too much knowledge to not use IBKR tbh, finpension is quite expensive with the 0.4% yearly fees.

 

[gtdispomed9093]

@s1a1om Thank you for your kind words. However, data analysis and actual financial knowledge are two different things imo. I like to do my research in every new field I get into but the reality is that I am not even scratching the surface. Experts are experts in a field for a reason...

 

[hailsatan420]

@gtdispomed9093 If you just buy an etf with IBKR what possible mistakes do you want to avoid?

What commission do you pay for buying and selling?

If you want to make it simple why all this work to save 0.12% TER? Why not simply buy VWRL/VWCE if you don't want to deal with US funds?

 

[gtdispomed9093]

@hailsatan420

If you just buy an etf with IBKR what possible mistakes do you want to avoid?

I can try to explain.

I really want to keep it simple and buy only VWRL on IBKR. As I said I have a demo account and the following is my experience.

I search for "VWRL" using the search function and I am immediately presented with the following options:

• VWRL VANG FTSE AW USDD - LSEETF
  
• VWRL VANG FTSE AW USDD - AEB
  
• VWRL VANG FTSE AW USDD - EBS

ok..no problem. After a simple search I find out that these different options refer to different exchanges. Where to go? Since I effectively buy the same thing i shouldn't matter too much, right? Well after another search apparently one should buy from the exchange where the most trading volume takes place to avoid a larger spread. It was not long ago that I read on this subreddit that someone bought a particular ETF from the Swiss Stock Exchange to avoid the currency conversion fees only to realise that there were very few trades taking place on the particular ETF at SIX so he might have to deal with higher spreads at the end.

OK, let's focus on the trade. After I search the exchange volume, I choose the London Stock exchange since most of the trading takes place there. When I go the "buy ETF" I am presented with these order types: Limit, Market ,Stop ,Stop Limit ,Trail ,Trail Limit ,Limit on Close. Sure I read on these and also blogposts suggesting what kind of order type I should use but this is another step that one should pay attention to.

I know that people with financial knowledge are not even bothered by these but for someone like me with education in a completely different field it poses a challenge and responsibility to get it right especially when it dealing with your savings

What commission do you pay for buying and selling?

Based in Finpension Fees pdf there are no Transaction Fees and no currency conversion fees. The Swiss Stamp duty should be paid when buying from SIX but other than that my understanding is that the costs are 0.39% + TER of your portfolio. You can see the full list here: https://finpension.ch/en/fee-schedule_fp_en/

If you want to make it simple why all this work to save 0.12% TER? Why not simply buy VWRL/VWCE if you don't want to deal with US funds?

I would have definitely done that if it was an option. I have yet to find an option that gives me the opportunity to select my ETFs and at the same time offers VWRL/VWCE. I have only had a look at Neon, Yuh, Findependence, Finpension and TrueWealth if I am not mistaken. It's very possible I missed it somewhere so please let me know if this is the case.

 

[jdnaman]

@gtdispomed9093 for broad index funds Market orders are fine. For single stocks or very volatile assets Limit Orders are better, but for VT it doesn't matter.

 

[evietheturtle]

@gtdispomed9093 You already figured out everything there is to know with IBKR. Now it's not worth it to give 0.3% of your portfolio to finpension.

 

[quant]

@gtdispomed9093 What I would do when planning to invest in something like VWRL is to invest in Invesco FTSE All-World (the same index) through neon's ETF savings plan.

The ETF's TER is 0.15% (I don't think there's anything comparable that is lower), the ETF is accumulating so no currency conversion fees on dividends and no stamp duty to reinvest the dividens. With neon's savings plan there are no custody fees and, for this particular ETF, no transaction fees. The only fees are stamp duty, but these are unavoidable if you want a Swiss broker. Oh, and you also get an eTax document (free, unlike with many others) to input all your transactions into your tax return with 1 click

This is BY FAR the cheapest option if you want a Swiss broker and non-US ETFs. Nothing comes even close.

 

[johng3624]

@quant Yup, the ETF savings plan really is neat

 

[gtdispomed9093]

@quant As I said above, unfortunately, Neon is only available to people who have Tax liabilities exclusively in Switzerland.

While my unlimited tax liability is here in Switzerland, I am eligible for partial tax liability (property tax at my EU-country).

I have contacted Neon to double check and was told that currently it is not possible to have an account with them. I was also told that in some months this will probably change but currently in it not possible.

 

[quant]

@gtdispomed9093 Can you use Swissquote or Postfinance? If so, buy FWRA (the mentioned FTSE All-World by Invesco) there.

 

[jdnaman]

@gtdispomed9093 Looks good. I like Robo-advisors for their simplicity, even though I don't use them myself. That being said I have two comments on your asset allocation: You will have to do a rebalancing yourself to adjust for market cap (say s&p drops to 55% market cap otherwise to robo will keep it at 62%). Yearly might be a good idea. Secondly I would encourage you to try the IBKR mobile app as it is much cleaner and simpler to use.

 

[godsgirl12]

@gtdispomed9093 Great setup, unfortunately findependent does not offer any small cap etf. so for example in the us you just would be exposed to the 500 largest companies. vt and vwrl have more small caps. with a broker you could add a small cap world etf, about to 10%.

I did what you did and then went out and bought the etfs on ibrk. can be replicated with 5 etfs.

Only the em etf contains small caps.

 

[godsgirl12]

oh and by the way you know probably know more about the worldwide stockmarket than 80% of professionals working in finance.

 

[s1a1om]

@gtdispomed9093 Whih which tool did you do your analysis btw

 

[gtdispomed9093]

@s1a1om I used ChatGPT to scrape the data from the PDFs and R to do the analyses.

 

[ronasc]

@gtdispomed9093 Great post and great questions. I’m very interested in hearing more pro opinion and hope it’s not all “do it yourself on IBKR”. Small note and question: I think their benchmark is more MSCI world (I shares ETFs) and not FTSE global all cap (Vanguard). Second: How do you deal with their 0.30% depot costs?

 

[gtdispomed9093]

@ronasc

Second: How do you deal with their 0.30% depot costs?

I suppose you refer to their custody fees. Well, I pay them , deduct these costs from on my tax returns hoping that I save some taxes.

 

[dylanboyle789]

@gtdispomed9093 I‘m using IBKR myself and the only slight concern that I have is that in the unlikely scenario that my phone breaks or gets stolen, I expect the process of account recovery a bit annoying (as 2FA is setup on my phone). At least based on what some people on Reddit allegedly experienced. Does anybody have experience with customer support when dealing with such issues?

 

[keesh]

@dylanboyle789 Yes it happened to me. Was very easy and quick, probably a 15 min phone call and I had the running app on the new phone.