Dividend ETFs

[Jerome]

that's a funny thing...
even if past performance is no guarantee of the future, we can clearly see the impact of investment diversification on volatility.

[spark]

I tested the permanent portfolio on this thing, it indeed has a yield of about 9% per year.
It's not bad except that not all ETFs are there. You should see with your portfolio by adding a gold mining ETF or physical gold. Although physical gold in ETFs... I don't believe in it much.

Maybe by adding a global bonds ETF.

Sincerely

[Jerome]

I looked into gold mining to diversify my portfolio, but these stocks are too volatile for my taste.
I don't like physical gold either, it doesn't make any money...
for bonds I put PCY and EMB, it's not global, but emerging markets
I prefer them because they protect me better against currency risk.
I don't really like bonds from European and/or American countries whose currencies are too weak.

[dom67]

I'm digging up this topic, which also interests me, and have a question about buying this type of ETF.
Jerôme, the ETFs in your short/long list are not listed in Switzerland.
Which broker do you use to place your orders on the NYSE, I presume? Thank you for your feedback.
I find the ETFs listed on the SIX too standard and redundant. There are hardly any strategic ETFs (Dividend, Momentum, etc.) and US players such as Vanguard are not represented.

[Jerome]

ETFs on the Swiss stock exchange are limited. I place my orders either through Postfinance or Migros Bank. Between the two, I can almost always find what I'm looking for. Sometimes, for the more "exotic" stocks that can't be traded on either side, I ask Migros Bank to open a position, which they almost always do, except for MLPs.

[dom67]

Thank you for your reply.
I'm well aware that it's not just the transaction price that counts, but have you ever been interested in a broker like Interactive Brokers?
Specifically for US stocks, their offer seems unbeatable, with orders starting at 1USD, compared with a cost of 50USD at Postfinance for a 15,000USD order.
Now Armand had mentioned, but without going into further detail, the "tax risk represented by the use of foreign stock exchange platforms for Swiss residents".
I'd be interested to know more because I don't know what it's all about.
As shares are not considered deposits, they cannot be "Cypriotized" by a foreign government. Furthermore, I understand that funds deposited with IB are transferred to Citibank in London, not to the US.
So if anyone uses IB (or another international broker) or knows of good reasons not to use IB, their opinion might be of interest.

[Jerome]

I don't know Interactive Brokers. It's true that at first sight their offer seems interesting for the brokerage fees. Personally, I don't bother with that, because for me, transactions are so rare that even if I have to pay a few francs or even tens of francs extra on an order, it's really insignificant. What is important, however, are the more hidden fees charged by banks and brokers, such as deposit fees, fund withdrawal/transfer fees, etc. With Postfinance, apart from the additional fees, I don't have to pay anything. With Postfinance, apart from transaction fees, everything is free. Besides, I know these financial intermediaries, I know what they're worth. A little less confidence in foreign players, though.
As for the tax risk mentioned by Armand, I assume he meant if these securities are not declared to the Swiss tax authorities.

[guyem]

I have had (among others,,,) an interactive brokers account and a tradestation account for about a year,,,,
As for IB, I am satisfied, even if we can always criticize... when opening the account, I made a transfer to Citigroup
Germany but apparently the account is domiciled IB UK, to be verified because we are entering the declaration period (I am a French resident)
I opened these two accounts because I use the options from time to time,,,,,
I almost opened an account with Swissquote for reasons of legal security of the securities deposited (a priori in Switzerland the securities are the property of the depositor and not of the bank, as a priori is the case in France) I found little information,,,,,
" ...
So, the sentence above appeals to me, given the current situation the legal aspects will unfortunately become more important,,,

Well, if I can give you more specific information about IB, it will be with pleasure.

[dom67]

Yes, if you're using IB for anything other than trading, you must own dividend-paying stocks, so hopefully you can fill me in.
As IB is a US company (even if the funds are in the UK), it will apply US tax treaties.
Here's what I understood:
- For US securities: US withholding tax of 15% (provided that form W-8BEN has been completed, otherwise 30%) then taxed at source in the country of residence.
- My question concerns non-US securities. For example, if you buy a German share via IB, IB will apply the Germany-US tax treaty (and not Germany-Switzerland in my case or Germany-France in your case).
My question is what happens next, i.e. whether it is possible to reclaim this withholding tax either via a tax credit at the time of declaration in the country of residence or from the German tax authorities.
I hope I've made myself clear. Of course, the best thing would be to have an example with figures.
Thanks in advance.

[guyem]

I haven't gone through the IB documents yet, but I did take a look at the Tradestations,,,,
I actually filled out the W-8BEN when I opened the account.
Well at the moment on this account, I have a CYS line whose div. were taxed at 15% and a kmp line whose div. were taxed at 35 %
KMp being an MLPs master limited partnership
the document reporting this is: form 1042-S ,,,,
It is up to me to include it in my France 2042 declaration in order to avoid double taxation given the France-US tax treaty,,,,,,
In my opinion, the fact that the account is in the US or elsewhere matters little (apart from the fact that French law requires that foreign accounts be declared). What matters is the country where the dividends were taxed first and the country of residence of the declarant, as well as of course the existence or not of a tax treaty between the two,,,,,,,

that said there is a good post on the site regarding the taxation of divs

[Jerome]

This makes me think that IB may be the solution for acquiring MLPs. You can't buy them via Postfinance, Migros Bank or Swisquote. But the account opening procedure seems a bit complicated, doesn't it?

[guyem]

Hello Jerome,
As far as I'm concerned, no problem with IB, there is support in French with a free number that I didn't need when opening, I was then contacted by phone by a person who is trying to determine the level of knowledge for using the options, and by email for the origin
funds….
I almost forgot ,,,, https://www.youtube.com/watch?v=l60LC22DXPY ,,, there is even a video on you tube by delacretaz, a tutorial in short, for opening an account.
For trading, if interested, the best is to contact Paul Marcel from Celtinvest, he has a thorough command

[Jerome]

Interesting, I'll think about it.
1) If I've understood correctly, there are still hidden costs to be taken into account, especially when you're looking at a long-term, dividend-oriented investment with a view to drawing a pension. I'm thinking in particular of a tax of CHF 11 per money transfer, which is necessary if you want to live off your dividends. It's worth noting that Postfinance (I'm always advertising them, I know, and yet I have no commercial connection with them) offers EVERYTHING free of charge. But then, you can't buy MLPs.
2) And of course I'm wary of taking my money out of Switzerland, not only out of a patriotic reflex but also out of concern that shares domiciled in Switzerland are the property of the depositor, which is less obvious outside the country.
=> So hidden fees and security of deposited securities, I still wonder.

3) All this leads me to another question. Digging through the regulations of my various Swiss custody accounts, I always come across a sentence along the following lines: "Securities that are exclusively or mainly traded in countries other than Switzerland are in principle deposited outside Switzerland, or transferred there at the customer's expense and risk if they have been deposited elsewhere. If deposited abroad, the Securities are subject to the laws and customs of the place where they are held. If the foreign law applicable to them makes it difficult
or impossible the return of Securities deposited abroad or the transfer of their proceeds of realization, the Bank is only obliged to provide the Customer with the right to the return of the Securities or the corresponding payment, if this right exists and is transferable".
=> So even with a deposit in Switzerland, believing to benefit from the protection of securities which are the property of the depositor according to the legislation in force, it could well be that according to this regulation our US securities are in fact deposited in the United States, or elsewhere, without being able to benefit from the protection of the depositor... Any idea or experience in this regard?

If not, does anyone know of a bank in Switzerland that allows MLPs to be traded?

[Jean@Louis]

I share Jérôme's view of PostFinance's suitability (BCV is behind them, in fact) for long-term investments: no hidden charges and over the phone they're always very helpful and give valuable information.

Concerning the purchase of MLPs, I've just tried via PostFinance for three stocks in the REITs/MLPs strategy (ARLP, SUX and another) and I can buy them: I get as far as the purchase confirmation screen.

I don't have any experience of point 3, but it's a bit scary...!

[Jerome]

In any case, I tried to buy NSH and KMP on Postfinance and Migros Bank, but it was impossible. Apparently it's the same for KMP on Swissquote.
For point 3, yes, it's scary if it's confirmed. If no one can tell us, I'll write to the bank to find out more. In this case, it would mean that it's no better to deal in foreign shares through a Swiss bank than through a foreign one... and the answer is obvious from IB, apart from the hidden costs.

[Author]

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