Investing in Swiss Exchange-Traded Funds (EFTs)

What are the Swiss Exchange trade funds (EFTs)?

Exchange-traded funds (ETFs) are securities similar to index funds that can be traded as common stocks. ETFs allow investors to trade a lot of securities in one transaction which is why they are seen as stocks with the diversification of mutual funds.

Swiss exchange-traded funds (ETFs) offer a diversified portfolio that can bring exposure to any investor. Some of the most common Swiss ETFs are equity ETFs, currency ETFs and also gold funds.

If you want details about EFTs, our specialists in company formation in Switzerland can provide you all the information you need.

What are the advantages of Swiss ETFs?

EFTs in Switzerland can be considered as single transactions. ETFs are basically indexes that focus on particular market areas and they can be bought on the Swiss market with only one transaction, this way allowing the investor to buy a small portfolio instead of stocks.

Considering an investor will make only a purchase when buying a Swiss ETF, commissions will be smaller unlike the commissions applied to an index that requires a number of transactions. ETFs do not carry load fees as for the managing fees these are considerably lower than mutual funds’ fees.

The Swiss taxes for EFTs  on capital gains are significantly lower compared to mutual funds because of the composition of each trade. An ETF will be taxed once the whole fund is sold which makes ETFs preferential when it comes to tax efficiency.

Swiss ETFs are traded through market time spans which make their price flexible because it is being updated throughout the whole day. EFTs are treated like equities on the stock market in Switzerland.

A Swiss company that sells an ETF will publish the list of assets daily leading to transparency unlike mutual funds that are being updated at different periods of time.

Swiss EFTs will follow a specific index therefore they will require minimum updates decreasing the risks and management fees. EFTs have a basic structure and are easy to comprehend. The associated costs for Swiss EFTs are reduced and the levied taxes are low. A yearly financial statement, completed with an associated income statement, balance sheet, and notes, must be prepared in accordance with the legislation. The documents must be done in a way that allows the assets and profits of the company to be valued as precisely as possible. For this purpose, you can rely on our Swiss accountants.

Are there any disadvantages of the Swiss EFTs?

An investor wanting to start trading Swiss EFTs must first be aware of both the benefits and the risks of EFTs, and also consider all the types of EFTs when choosing one that best suits him..

Some of the risks associated with Swiss EFTs are that there is no capitals guarantee therefore the capital invested in an EFT is not protected, the value of the EFT will fluctuate and the exchange rates will vary which leaves the investor exposed.

If you want invest in Switzerland you are welcome to contact our Swiss experts in company formation. They will provide you with all the information you need for your business.