Home bias in finpension pillar 3a

[tastywallet]

I've just checked my pillar's asset allocation in finpension. Back then I've decided for the "Global 100" strategy with a Credit Suisse index fund. Now I realized that this is not so global after all - it contains 40% Switzerland, where the real global share of Switzerland is at around 2-3%. The same is true for the UBS and Swisscanto funds.

I'm trying to apply my own strategy, as it seems that none of the index funds really offer a global share (like Vanguard Total ETF for example does).

Has anybody done something similar already and has some insights to share?

Edit #1

I found some data in the FTSE Global All Cap Index fact sheet. From the market cap, large caps have 74%, mid caps 16% and small caps 10%. So even here the given Global 100 strategy from finpension, they are biased towards small caps (20%) vs large&mid caps (80%) instead of 10:90.

Now I know how to allocate CH (all caps) and Developed World ex CH (all caps).

Edit #2

For the emerging vs developed market, I found some data in the VT Total World Stock fact sheet. According to this, emerging markets take a 10% of the world market. Also, Switzerland has a global market share of 2.2%

With this in mind, I think I would go for this asset allocation:

• 79% Developed World ex CH, Large and Mid cap (e.g. CH0429081620)
• 8.3% Developed World ex CH, Small cap (e.g. CH0214967314)
• 2.2% CH all caps (e.g. CH0031341875)
• 10.5% Emerging World, Large and Mid cap (e.g. CH0017844686)

For the sake of simplicity, and because I didn't find a fund for it, I've skipped Emerging small caps.

What do you think, what do you do with your pillar 3a asset allocation?

 

[tobiahjude99]

@tastywallet Concerning emerging markets: there are two definitions: one by msci and one by ftse.

Ftse defines South Korea as developed and therefore it‘s excluded in the funds that follow ftse indices. And it makes up 10%

Msci defines it as emerging and there EM make up 12% of the world as result.

Ubs/CS etc. normally use msci definitions. Therefore you would need to weight them 12% using msci index following funds.

Super nitpicky and doesnt change much, but I just like to point that when I see this, because it‘s not well known to most.

Overall your plan looks solid to me

 

[tastywallet]

@tobiahjude99 Thank you for your insights! Didn't know that. I will adjust the allocation accordingly.

 

[travis73]

@tastywallet Theres a max of 30% in your 3a that is allowed to be in non-chf. That’s the reason frankly has chf hedged indexes in their 95 extreme index, and probably also the reason many other 3a have a strong home bias. It’s redicoulus imo, especially since it often means that 10% each, so a 3rd in total, are nestle, novartis, roche. Surely better than global diversification with currency risk, right? The fuck are they thinking

Take a look at frankly‘s extreme index 95, it might be the least opinionated one, but it has 2.5% gold and 2.5% real estate, so theres that

 

[cathya]

@travis73 Custom strategies at finpension don't have any currency restrictions. Most other 3a providers indeed have such restrictions, though. E.g. VIAC requires 40% to be either in CHF or CHF-hedged.

frankly Extreme 95 Index still holds 30% Swiss equities, so only slightly more global than the default strategies of finpension and VIAC. A custom strategy at finpension is likely the best choice for a diversified equity portfolio.

 

[hesmyrock]

@travis73 Yeah, I can understand the security point of currency in CHF but it really is ridiculous with the nestle novartis roche thing.
CHF hedged seems like a pretty good alternative though

 

[martyiy]

@tastywallet Some food for thought from mustachian post forum

 

[tastywallet]

@martyiy Genius, thanks!

 

[siphosethu]

@tastywallet

Genius, thanks!

You're welcome!

 

[jaz2001]

@tastywallet I have finpension and I don't know what everyone is saying here. You can bypass this problem easily. You just need to pick the customized strategy and pick a fund with the exposure you want, I picked CSIF (CH) III Equity World ex CH Blue - Pension Fund Plus ZB which only has 0.1 % swiss exposure and seemed like the most similar to a world.etf. So now I have 99% of my pilar 3a invested in that and 1% cash. Apparently it's only the total funds managed by finpension that have to be 40% in Switzerland but not for individual investors.

 

[virtualhope]

@tastywallet About your edit 2; yes that sounds reasonable if you really want all cap. I personally did 3% SMI, 86% Developed ex CH, 10% EM and 1% Cash (mandatory with VIAC).

 

[smta276603]

@tastywallet With VIAC you can do a more global allocation, but you are still overexposed to Swiss companies. There is a legal requirement that at least 40% (I think) is in CHF, so this may be the reason.

 

[tastywallet]

@smta276603 Yes, I'm trying to do my own asset allocation, but I'm struggling a bit with finding enough data. For example, there's only a Global ex CH large and mid cap fund, and another one which is Global ex CH small cap fund. There's no Global all cap fund. So I have to do the weighting on my own, but I don't know their shares in the world.

Are you sure about the 40% requirement? I was just able to change my strategy to 99% Equity World ex CH in finpension.

 

[smta276603]

@tastywallet I’ll check the requirement, maybe it has changed.

Regarding the big cap / small cap, I think most indices would be large cap anyway (think s&p500). With large+mid you probably cover really a lot of the market, so unless you want to overrepresent small caps I would not worry too much.

 

[stormcloud1987]

@tastywallet The msci world index fund is available on many brokers and is much more globally diversified

 

[tastywallet]

@stormcloud1987 Thank you for the reply. I'm looking for something to implement in the tax-advanced pillar 3a.

 

[hesmyrock]

@tastywallet Personally I do mostly sp500 and NASDAQ (since the main part of the world indexes is in US anyway) and cover the swiss part with SPI

 

[orchardllc]

@tastywallet can you do that asset allocation within finpension?

 

[orchardllc]

@tastywallet thanks!

 

[jesuslovesmel]

@tastywallet I opened an finpension account for 2024. Do you think it's good ? Do you recommend it ? What kind of benefices can I expect ?