Investment funds of the principal banks lower returns for customers

Banks often sell investors their own products - not to their benefit, a study shows.

Banks like to sell their customers in-house products. This has a strong impact on investors' returns, as a study by VZ Vermögenszentrum shows. In 2020, the composition of 2,500 securities accounts provided by private customers was examined. It showed that banks sold their customers even more in-house products than in the previous year. At that time, the proportion was 44 percent. In 2020, it was already 63 percent on average (an increase of 43%!). Five years ago, the share was still below 30 percent.

Where does this come from?

Often, banks' own products are actively managed funds with high fees that reduce the customer's return. The median return on in-house products in 2020 was 1.4 percent on average - when three-quarters of customer assets were invested in them. By contrast, a return of 3.6 percent was possible with exchange-traded

index funds (ETF) on Swiss equities. This calculation takes into account the fund and custody account fees of 0.1 percent per year each. With an investment of 100,000 francs, an investor with an ETF was therefore 2,200 francs richer at the end of the year than an investor who relied on bank products. The only winners in this case are the banks themselves, which lure customers into their active funds.

The team of Thalmann & Verling Trust reg. is always at your disposal for a free and above all independent portfolio analysis including discussion.