Advantages of the finpension investment solution

1. Lower fees without surcharge on the foreign exchange rate

Although our investment solution has much more to offer, it is one of the most favourable on the market. The fees are just 0.39 percent per year, which is a fraction of what banks charge.

Furthermore, we deliberately do not charge a hidden fee on the foreign currency exchange, which is otherwise quite common. A foreign currency exchange takes place when you transfer money in Swiss francs to finpension, but the fund is traded in US dollars, for example. In this case, we must first buy US dollars for you to be able to pay for the fund in US dollars. As already mentioned, we do not charge a foreign currency surcharge. The exchange fee charged by the broker is paid by finpension.

2. More effective with withholding tax reclaim on US dividends

Dividends and interest are subject to withholding tax in most countries (known as «withholding tax» in Switzerland). To keep this withholding tax as low as possible, we focus on funds with the right fund domicile.

We also offer unique reporting for the flat-rate tax credit (DA-1) of US withholding taxes within selected ETFs. With a US dividend yield of around 2 percent and a withholding tax of 15 percent, the flat-rate tax credit generates a yield advantage of 0.30 percent for you (subject to approval by your tax authority).

3. Fewer duties and spreads thanks to «netting»

You have a further advantage with the finpension investment solution thanks to ‘netting’. Netting means that we summarise all of our clients’ buy and sell orders on the rebalancing day and only trade what is required on balance. Example:

• We have to buy 100 units of fund X for client A.
• For client B, we have to sell 60 units of the same fund X.
• Then we effectively only buy 40 units. The other 60 units that customer A receives come internally from customer B.

In comparison, if you were to buy the funds yourself via a securities custody account, we can reduce your costs for stock exchange fees and spreads thanks to netting. Spread is the trading margin between the buy and sell price.

Good to know: Other digital asset managers cannot offer netting because they do not manage the account and custody account themselves. They have to transmit the orders to the bank individually for each client. We at finpension can carry out netting because, thanks to our licence as a securities firm, we manage the account and custody account ourselves, are not dependent on a bank and can therefore optimise it for you.

4. Better performance thanks to recurring best-in-class fund evaluation

When comparing index investments, many investors rely solely on the expense ratio (TER) reported by the fund. This approach falls short. Many other criteria need to be taken into account in order to assess and compare the economic attractiveness of a fund as a whole. We also take the following criteria into account in the selection process:

• How high is the liquidity on the market and what are the buy and sell spreads for transactions (the difference between buy and sell prices)?
• How tax-efficient is the fund implemented?
• How well is an index mapped (tracking error)?
• How high is the fund volume and is the continuity of the fund ensured?
• Are there additional risks (e.g. synthetic replication and securities lending)?
• How well is any currency hedging implemented?

We review the selection of index funds and ETFs on an ongoing basis and focus on investment instruments that can best replicate an index (best-in-class).