After much to and fro, the protocol of amendment to new double taxation agreement between the USA and Switzerland was finally approved last year and came into force on 01.01.2020. For Pillar 3a investors, this means that since January 2020 it has been possible to exempt withholding tax on dividend income in the USA. This will give us access to lower-cost and tax-exempt US investment funds. In short: lower fees and higher returns!
Essentially, the switch will lead to an additional return of 0.3% per year on American equities. This is based on the assumption of a dividend yield of 2%, of which the last 15% of the withholding tax can now be reclaimed under the new double taxation agreement.
What needs to be done?
Standard strategies:
If you, like the majority of our clients, are invested in a standard strategy with an investment focus Global, Global Sustainable or Switzerland, you won’t need to do ANYTHING. Simply lean back and watch as we cut costs and optimize your return! With the rebalancing of 02.03.2020, the adjustment is made automatically. The following statement only concerns customers with an individual strategy.
Individual strategies:
The following applies to you if you have put together your own strategy: If the new, withholding tax-exempt fund replicates the identical index, the change will be made automatically for you. If the new fund differs from the existing index, or only tracks a similar index, without adjusting your investment strategy, you will remain invested in the current fund.
Conclusion: If in your individual strategy you use the following funds, you must make any switch to the withholding tax-exempt fund YOURSELVES. We therefore strongly recommend that you review your investment strategy.
- iShares Core S&P 500 ETF
- UBS ETF MSCI USA SRI
- iShares US Property Yield
- CSIF Europe ex CH Real Estate
- CSIF Asia Real Estate
Once you have adjusted your strategy, the change will be implemented with the next rebalancing.
Changes in detail
Equity building blocks:
| Previous Fund | New Fund |
|---|---|
| iShares Core S&P 500 IE00B5BMR087 Cost to date 0.07% | CSIF US – Pension Fund CH0030849712 Costs new 0.00% |
| UBS ETF MSCI USA SRI LU0629460089 Cost to date 0.28% | CSIF US ESG – Pension Fund CH0397628709 Costs new 0.04% |
| CSIF World ex CH CH0032400670 Cost to date 0.05% | CSIF World ex CH – Pension Fund CH0032400639 Costs new 0.00% |
| CSIF World ex CH hedged CH0303759390 Cost to date 0.05% | CSIF World ex CH hedged – Pension Fund CH0198191493 Costs new 0.00% |
| CSIF World ex CH Small Cap CH0233387429 Cost to date 0.09% | CSIF World ex CH Small Cap – Pension Fund CH0214967314 Costs new 0.09% |
| CSIF World ex CH Small Cap hedged CH0233387494 Cost to date 0.09% | CSIF World ex CH Small Cap hedged – Pension Fund CH0214968353 Costs new 0.09% |
Real estate building blocks:
| Previous Fund | New Fund |
|---|---|
| iShares US Property Yield IE00B1FZSF77 Cost to date 0.40% | CSIF Real Estate World ex CH – Pension Fund CH0217837456 Costs new 0.01% |
| CSIF Europe ex CH Real Estate CH0032044684 Cost to date 0.01% | CSIF Real Estate World ex CH – Pension Fund CH0217837456 Costs new 0.01% |
| CSIF Asia Real Estate CH0032044791 Cost to date 0.01% | CSIF Real Estate World ex CH – Pension Fund CH0217837456 Costs new 0.01% |
