Gold ETFs in CHF: Why Your Zero-Fee Fund Is Secretly Charging 0.36%

Swiss investors love gold. It’s the financial equivalent of a bunker in your basement, tangible, reassuring, and theoretically immune to the chaos of fiat currencies. But when you trade your physical bars for the convenience of a CHF-denominated gold ETF, you’re not just buying exposure to the yellow metal. You’re buying a complex financial product with more hidden corners than a Zürich Altstadt (Old Town) alleyway. And those corners cost money.

The research is brutal: most investors fixate on the Total Expense Ratio (TER) like it’s the final word on cost, then wonder why their returns feel lighter than expected. The reality? TER is just the opening bid in a much larger fee game.

The Physical Gold ETF Trap: When 0% Means 0.36%

Let’s start with the poster child of misleading costs: Xetra Gold (DE000A0S9GB0). The fund proudly advertises a TER of 0.00%. Zero. Nothing. Free gold exposure! Except it’s not free. Buried in the KID (Key Information Document) is the real story: Clearstream Banking AG charges a storage fee of 0.025% monthly on the physical gold holdings. That’s 0.3% annually, plus VAT, pushing the real cost to approximately 0.36% per year.

This isn’t a rounding error. On a CHF 100,000 position, you’re paying CHF 360 annually for that “zero-fee” convenience. The fund structure simply separates the management fee (zero) from the custody fee (not zero), creating a marketing headline that bears little relation to your actual costs.

Compare this to Invesco Physical Gold (IE00B579F325) or Amundi Physical Gold ETC (FR0013416716), which bundle their costs into a transparent TER around 0.12-0.15%. Suddenly, the “expensive” option looks like a bargain. The lesson for Swiss investors: always read the KID like a Steuererklärung (tax declaration), every line matters, and the big print giveth while the small print taketh away.

Domicile Drama: Ireland vs Switzerland

The Reddit crowd gets heated about fund domicile, but here’s the uncomfortable truth: for most Swiss residents, it matters less than liquidity and total cost. Irish-domiciled ETFs dominate the European market because of UCITS regulation and tax treaties. Switzerland doesn’t have the same fund ecosystem, so genuinely Swiss-domiciled gold products are rare.

That said, domicile does affect a few critical things:

• Withholding Tax: Irish funds benefit from the US-Ireland tax treaty, which can reduce withholding on underlying assets (though gold itself doesn’t generate dividends). For Swiss investors, the impact is minimal compared to equity ETFs.
• Investor Protection: Swiss-domiciled funds fall under Finma (Swiss Financial Market Supervisory Authority) regulation, while Irish funds answer to the Central Bank of Ireland. Both are robust, but the Swiss framework might feel more familiar if you’re already navigating local Finma rules for your Pensionskasse (pension fund).
• Currency Hedging: Here’s where Swiss domicile gets interesting. One commenter mentioned a CHF-hedged gold ETF (CH0106027128) that performed well in 2025 but lagged over longer periods. CHF hedging on gold is a double-edged sword: you’re protecting against currency fluctuations, but you’re also layering derivative costs and potentially missing out on CHF weakening phases. For most conservative investors, unhedged physical gold ETFs provide cleaner exposure.

Liquidity: The Bid-Ask Spread Tax

You found a low-cost ETF. Great. Now try selling CHF 50,000 of it during a market panic. The TER won’t save you from a 1% bid-ask spread that instantly vaporizes half your year’s gains.

Many Swiss investors buy gold ETFs on IBKR (Interactive Brokers) using smart routing, which algorithmically hunts for the best execution across exchanges like SBF (Swiss stock exchange) or Gettex. This is smart, literally. The algorithm often finds better liquidity on German exchanges, but you need to understand what you’re trading.

The Amundi Physical Gold ETC, for instance, trades on multiple venues. A retail investor clicking “market order” on their bank’s basic trading platform might get routed to the least liquid option, paying a spread that dwarfs the annual TER. Professional execution matters as much as fund selection. Use limit orders, check the spread before trading, and if you’re building a large position, consider splitting it across multiple days to avoid moving the market against yourself.

Physically Backed vs Paper Gold: The Audit Question

The Reddit consensus is clear: physically backed or nothing. Paper gold, futures-based products or synthetic ETFs, introduces counterparty risk that defeats the purpose of owning gold in the first place.

Amundi provides audited proof of its physical holdings, with reports available showing regular verification by HSBC as custodian. You can check their latest audit here. Invesco offers similar transparency. This matters because in a systemic crisis, you want to know your gold bar actually exists in a vault, not as a derivative contract that could evaporate.

The counterargument: physical storage costs money (see Xetra Gold above). But for conservative investors, that’s a feature, not a bug. You’re paying for insurance, not speculation.

Gold Mining ETFs: The Leverage You Didn’t Want

The research mentions iShares MSCI Global Gold Miners ETF, and the community reaction is unanimous: avoid. Here’s why this matters for Swiss investors specifically.

Gold mining equities are not gold. They’re leveraged bets on gold prices, operational efficiency, labor relations, and political risk in mining jurisdictions. When gold rises 10%, miners might rise 30%, but when gold falls 5%, miners can collapse 25%. Add in the fact that many mining companies are listed in Canada or Australia, introducing currency risk on top of equity risk, and you’ve got a product that looks like gold but behaves like a volatile tech stock.

For a Swiss investor seeking portfolio stability, this is the opposite of what you want. Your gold allocation should dampen volatility, not amplify it. If you wanted equity risk, you’d buy Swiss large-caps or global index funds in your Säule 3a (Third Pillar). Keep your gold clean.

CHF Hedging: When Currency Protection Backfires

That CHF-hedged gold ETF (CH0106027128) performed brilliantly in 2025, according to one investor. But zoom out to 3-5 years, and the picture sours. Why?

Gold is globally priced in USD. When you hedge to CHF, you’re essentially shorting CHF against USD. If the Swiss National Bank intervenes to weaken the franc (as it often does), your hedge costs money. If CHF strengthens, your hedge pays off, but then your gold price in CHF terms might fall anyway, creating a zero-sum game.

For Swiss residents earning CHF and spending CHF, the currency question is complex. Unhedged gold provides natural diversification against CHF strength. Hedged gold gives you pure metal exposure without currency noise. Neither is wrong, but hedging adds a layer of complexity and cost that many investors don’t fully understand. The 2025 outperformance likely reflected specific CHF/USD moves, not superior structure.

Tax Efficiency: The Swiss Wealth Tax Twist

Here’s something most ETF marketing materials won’t tell you: Switzerland taxes gold ETFs as part of your global wealth, while physical gold held personally might fly under the radar in some cantons. The Steueramt (Tax Office) expects you to declare your ETF holdings at year-end market value, and they’ll apply your cantonal wealth tax rate.

Capital gains on gold ETFs are generally tax-free for private investors (unlike real estate gains in some cantons), but dividend distributions, rare for gold ETFs, would be taxable. The real tax efficiency question is wealth reporting. Some investors prefer allocated physical gold for privacy, though this introduces storage and insurance costs that often exceed ETF fees.

The Execution Checklist for Swiss Investors

1. Calculate Total Costs: TER + custody fees + VAT + bid-ask spread + currency conversion costs if buying in EUR/USD. Xetra Gold’s 0.36% all-in cost suddenly looks expensive compared to Invesco’s 0.15% TER.
2. Verify Physical Backing: Check the KID for custodian details and audit frequency. If the fund uses synthetic replication, walk away.
3. Test Liquidity: Look at the average daily volume and current spread on your intended exchange. A wide spread is a hidden fee you pay on every trade.
4. Consider Domicile Nuances: Irish funds are fine for most, but if you have complex cross-border tax situations, consult a Steuerberater (tax advisor) about potential treaty benefits of Swiss-domiciled alternatives.
5. Skip the Miners: If you want gold exposure, buy gold. Not gold equities, not gold futures, gold.
6. Hedge Only With Purpose: CHF hedging solves one problem but creates others. Unless you have a specific currency risk management strategy, stick with unhedged physical gold.

Final Word: The Swiss Precision Test

Switzerland built its reputation on precision engineering and transparent pricing. Your gold ETF should meet the same standards. That means looking beyond the headline TER, understanding every fee layer, and choosing products that match your actual goals, whether that’s crisis insurance, currency diversification, or long-term wealth preservation.

The market is full of products designed to exploit investors who stop at the first number they see. Don’t be that investor. Your future self, reviewing their Vermögensverzeichnis (asset statement) during the next financial crisis, will thank you for doing the homework now.