- Three criteria are enough: a diversified ETF, under 0.20% in fees a year, an online broker.
- Accumulating or distributing: dividends are taxed in both cases.
- The fund's domicile, Ireland or the United States, slightly changes the tax on US dividends.
Choosing an ETF in 3 criteria
Once you have decided your split between equities and bonds, three questions do most of the work:
- Is it diversified? An ETF on a major global index gives you thousands of companies in a single purchase. That is the basis of a solid portfolio.
- Does it cost less than 0.20% a year? On major indices, that is easy to find. Above that, you are often paying for nothing.
- Do you buy it through an online broker? The same ETF costs much more to buy and hold at a traditional bank.
To decide between two ETFs that meet these criteria
- The exact index: developed markets (about 1'500 companies) or the whole world including emerging markets (about 2'900).
- Replication: physical (the fund holds the securities) or synthetic (through derivative contracts). Physical is simpler to understand.
- Fund size: several hundred million at least. A large fund trades with a smaller gap between buying and selling price, and is less likely to be closed.
- Domicile: see below.
What an ETF costs per year
Three layers of fees add up: the fund's internal fees (the TER), stamp duty if you go through a Swiss intermediary, and brokerage. With an index ETF, an online broker and few orders, the total stays around 200 francs a year on 100'000 francs invested. An active fund would cost closer to 1'500.
Over 20 years, a little more than one point of fees a year makes tens of thousands of francs of difference: the calculation is in investing in Switzerland.
The three layers of fees in detail
| Fee | Who takes it | Order of magnitude |
|---|---|---|
| TER (internal fees) | The fund manager | 0.07 to 0.50% a year |
| Stamp duty | The Confederation, via a Swiss intermediary | 0.075 to 0.15% per order |
| Brokerage | The broker | CHF 0 to 30+ per order |
Example on CHF 100'000 with 4 orders a year: about CHF 70 of TER, CHF 60 of stamp duty and CHF 0 to 120 of brokerage, so CHF 130 to 250 a year.
The ETF's domicile: Ireland or the United States
The fund's domicile changes what you lose on US dividends, which weigh heavily in a global ETF. In both cases, the United States withholds 15%. With a US ETF, you recover that withholding in Switzerland with form DA-1. With an Irish ETF, it is taken inside the fund and lost.
The gap is a few tenths of a percent a year. On the other side, US securities can expose your heirs to US estate tax, and they are less easy to access. There is no universal right answer: it is a trade-off worth knowing.
Ireland or the United States, point by point
| US-domiciled ETF | Irish-domiciled ETF | |
|---|---|---|
| Withholding on US dividends | 15% (with form W-8BEN) | 15%, taken inside the fund |
| Recoverable in Switzerland | Yes, with form DA-1 | No |
| US estate tax | Possible above certain amounts | No |
| Available at | Brokers with access to the US exchange | Almost all brokers |
In Switzerland, dividends reinvested by an accumulating ETF are taxed as income, just like those of a distributing ETF. The values to declare are in the FTA's price list. The difference is practical, not fiscal.
Where to buy
The platform often matters more than the choice of ETF itself.
| Platform | For whom | Fees |
|---|---|---|
| Interactive Brokers | Regular investor, comfortable in English | Among the lowest, no Swiss stamp duty |
| Swissquote | Swiss bank, interface in several languages | Higher, custody fees |
| Apps (Yuh, Neon) | Beginners, small amounts | Low on small orders, narrower choice of ETFs |
| Traditional bank | Everything in one place | High, often 0.25 to 1% per order plus custody fees |
The figures for the first two are in Swissquote or Interactive Brokers. Would you rather delegate the choice and the rebalancing? See robo-advisors and their fees.
Going further
The trading currency does not change your currency risk. A global ETF listed in francs holds the same shares in dollars, euros and yen as one listed in dollars. What counts is the content of the fund, not the label. What the strong franc has cost, and when to hedge: the strong franc and currency risk.
Currency hedging is expensive on equities. A "CHF-hedged" ETF pays roughly the interest rate gap between the franc and other currencies, often more than one percent a year. Over more than ten years, it usually costs more than it protects. It makes more sense for bonds.
Use limit orders. Set the highest price you are willing to pay, and buy during the opening hours of the fund's main exchange: the gap between buying and selling price is smallest then.
How much in equities for you?Simulate your allocation over 25 years.
Open the calculatorYour next step
To do, at your own pace:
Path “Start investing” · step 4 of 8
Frequently asked questions
How much does an ETF cost per year?
An ETF on a major index often costs 0.07 to 0.20% in internal fees (TER) a year, or CHF 70 to 200 on CHF 100'000. Stamp duty on each purchase through a Swiss intermediary and brokerage fees come on top.
An ETF domiciled in the United States or in Ireland?
For a Swiss resident, a US ETF suffers 15% withholding on dividends, recoverable with form DA-1. An Irish ETF loses part of it inside the fund, with no way to recover it. On the other hand, US securities can expose your heirs to US estate tax above certain amounts.
Accumulating or distributing: which one is taxed?
Both. In Switzerland, dividends reinvested by an accumulating ETF are taxed as income, just like those of a distributing ETF. The difference is practical, not fiscal.
Does the trading currency change the currency risk?
No. A global ETF listed in CHF or EUR holds the same shares in dollars, euros and yen. It is the content of the fund that creates currency risk, not the currency on the label.
Do I need a CHF-hedged ETF?
Hedging costs roughly the interest rate gap between the franc and other currencies, often more than 1% a year. On equities held for more than 10 years, it usually costs more than it protects. It makes more sense for bonds.
Are my ETFs protected if the broker goes bankrupt?
Yes. Securities are kept separate from the broker's balance sheet and remain yours. The CHF 100'000 deposit guarantee covers cash held at a Swiss bank.
Sources: Federal Stamp Duty Act (StG / LT) ; FTA, withholding tax and form DA-1 ; Switzerland-United States double taxation agreement ; FINMA ; ETF issuer documentation and Morningstar data (TER, fund size).