Which SMI ETFs Are Suitable for Beginners

I am a total beginner insofar as ETFs and investment is concerned, but two ETFs have caught my eye:

- UBS ETF (CH) SMI (CHF) A-dis / TER: 0,20% / Size: 1.460 million
- iShares SMI (CH) / TER: 0.35% / Size: 2.380 million

Are these ETFs suitable for investment newbies? Do you have any other tips or wisdom for beginners getting started in ETFs?

Thank you

Hi there,

Both of the ETFs which you mentioned track the Swiss Market Index (SMI) which in turn tracks the 20 most sought after stocks in the Swiss stock market.

Both of these ETFs use full phyiscal replication, which means the investment fund actually buys shares in the stocks which make up its underlying index. Both of these funds are distributing funds and not accreting funds, which means dividends are distributed to investors and not reinvested.

The UBS ETF with a TER of 0.2% is more affordable than the iShares ETF with a TER of 0.35%.

In addition to costs, it is also important to understand the index which ETFs track. Some fund managers create their own indexes, while many ETFs track established indexes like the Dow Jones, DAX and Euro Stoxx. The more diverse the index, the more the risk is spread out across diferrent markets.

Many consumers opt for fully replicating ETFs. Managers of these funds aim to track the underlying index as closely as possible. Synthetic ETFs are also commonly offered. Funds of this type do not actually buy the securities tracked by indexes.

Important: When you invest in ETFs which are based on a foreign currency such as the U.S. dollar or the euro, you expose yourself to currency exchange rate fluctuations.

Best regards from Moneyguru

More on this topic:
Online broker comparison
Guide to buying ETFs

>Are these ETFs suitable for investment newbies?

No, SMI is far too concentrated in just 3 stocks: Nestle + Novartis + Roche > 60% weight. As a beginner, just buy some world fund or something.