ETFs in Switzerland: your ultimate investment guide

Exchange Traded Funds (ETFs) have become one of the most popular investment vehicles – and for good reason. Here in Switzerland, they are particularly favoured because they offer a straightforward, cost-effective, and highly diversified way to invest globally in various markets. As a private investor, you also benefit from attractive tax advantages in the Swiss tax system.

In this concise guide, you will learn everything you need to know about ETFs: what exactly these investment instruments are, the benefits they offer, how you as a Swiss investor can invest in ETFs, and the specific aspects you should pay attention to in the Swiss context.

What are ETFs and how do they work?

Exchange Traded Funds (ETFs) are exchange-traded funds that track a specific market index. Imagine you want to invest in the largest Swiss companies – an ETF tracking the Swiss Market Index (SMI) allows you to do this with a single security. Or you want to diversify globally? In that case, an ETF tracking the MSCI World Index could be the right choice for you. This way, you achieve broad exposure to numerous companies and sectors with just one product.

So, how exactly does an ETF work? Essentially, the fund company purchases all the securities in the corresponding index in the same proportion as in the index itself. For example, if Nestlé makes up 15% of the SMI, the ETF also invests around 15% of its assets in Nestlé shares. This index replication can be done either through physical replication (actual purchase of all securities) or synthetic replication (using derivatives).

ETFs follow a passive investment strategy: they do not try to outperform the market by skillful stock picking but merely aim to replicate the performance of the underlying index as accurately as possible. This eliminates the need for an expensive management team making active investment decisions. The annual fees (Total Expense Ratio, TER) are significantly lower, which can greatly enhance your net return over time.

ETFs are traded like shares directly on the exchange – hence the name "Exchange Traded" Fund. Unlike traditional mutual funds, ETFs do not have an upfront fee and can be traded anytime during market hours at the current price.

Benefits of ETF investments in Switzerland

ETFs are particularly known for their low costs. Unlike actively managed funds, which charge annual fees of 1 to 2%, many ETFs cost less than 0.2% per year. This has a positive long-term impact on your returns. Additionally, passive ETF strategies avoid expensive stock picking – an approach also followed by Alpian.

Another advantage is broad diversification. Even a single ETF allows you to invest in hundreds or even thousands of securities, significantly reducing your risks. Moreover, ETFs cover not only stocks but also asset classes like bonds, real estate, or commodities.

For you as an investor in Switzerland, ETFs are also attractive from a tax perspective, as capital gains are tax-free here. Transparency is another major benefit: you always know exactly what securities are included in your ETF and how your investment is performing.

Furthermore, ETFs offer high liquidity and easy accessibility. You can trade them flexibly through the Swiss stock exchange, even in small amounts via a savings plan. Numerous Swiss providers and digital platforms, including Alpian, allow you to buy ETFs conveniently via app.

Popular ETFs in Switzerland: an overview

With the vast array of ETFs available, it’s helpful to focus on those that are particularly popular in Switzerland. Below is a selection of four ETFs covering different regions and themes, along with their key data:

¹ Return 2024: The approximate performance for the calendar year 2024 (capital gain including dividends). Global stock markets saw double-digit growth in 2024 (MSCI World approx. +20% in USD), while the Swiss stock market rose more modestly (SPI approx. +6% in CHF). Past performance is not an indicator of future results.

Why are these ETFs relevant for Swiss investors?

• The Vanguard FTSE All-World ETF covers over 3,000 stocks from developed and emerging markets, providing broad global diversification with just one product. With low fees (0.22% TER) and a substantial fund volume, it’s an excellent base for long-term portfolios in Switzerland.

• Want to focus on the Swiss market? The iShares Core SPI (CH) tracks the broad Swiss Performance Index with over 200 Swiss companies at very low costs (0.10% TER). Additionally, its Swiss domicile offers tax advantages.

• The iShares Core MSCI EM IMI ETF opens up access to around 3,000 companies from emerging economies like China or India. Despite higher volatility, it complements global diversification perfectly and offers competitive fees (0.18% TER).

• Interested in sustainability? The UBS MSCI World SRI ETF selects companies based on strict ESG criteria. It combines sustainable investment with broad global diversification without sacrificing significant returns compared to traditional ETFs.

Of course, there are many other popular ETFs, such as those tracking the S&P 500 or NASDAQ-100. The right choice ultimately depends on your personal investment strategy.

Step-by-step guide to investing in ETFs

Now, let’s get practical: How do you get started with ETF investments in Switzerland? Below is a concise guide, from preparation to the long-term management of your investments:

1. Set your goals and investment strategy

• Define your objective (retirement, medium-term wealth accumulation, or something else).

• Determine your investment horizon (short, medium, long term) and risk tolerance.

• Specify your preferences for sustainability and Swiss exposure.

2. Open the right investment account

Compare offerings from banks and online brokers regarding:

• Account management fees

• Transaction costs

• Trading venues (SIX Swiss Exchange recommended)

• Currency accounts (for ETFs in USD/EUR)

3. Choose suitable ETFs

• Select indices that align with your investment objectives.

• Look for ETFs with low TER (Total Expense Ratio).

• Check the fund currency and domicile (Switzerland/EU preferred).

• Decide between accumulating or distributing ETFs.

• Opt for established ETFs with high fund volume.

• Consider the “Tracking Difference” to the index.

• Physically replicated ETFs are recommended for beginners.

4. Purchase the ETFs

• Log in to your account and search for the relevant securities using their ISIN or ticker codes.

• Ensure you select the right share class (exchange, currency).

5. Long-term monitoring

• Check performance semi-annually.

• Perform rebalancing if needed.

• Consider a savings plan for regular contributions.

• Stay calm and maintain a long-term focus during market fluctuations.

By following this approach, you’ll optimise the strengths of ETFs: a well-thought-out portfolio requires minimal management and continually brings you closer to your financial goals. If you prefer not to select ETFs yourself, managed solutions such as Robo-Advisors or wealth management services can take care of this task for you.

Conclusion: Simple and efficient investing with ETFs

ETFs have rightfully established themselves in the Swiss investment landscape. They combine low costs, broad diversification, and flexibility – features that are especially valuable for investors.

A structured approach, based on a targeted selection of ETFs according to clear quality criteria, has proven effective in achieving stable, market-near results. For you, this means: define your personal strategy, choose the right ETFs, and stick with it.

Need help selecting suitable ETFs or creating your personalised investment strategy? Several financial service providers in Switzerland, including Alpian, offer tailored solutions. With clear criteria and solid knowledge, nothing stands in the way of your successful ETF investment.

Good luck on your investment journey!