Exchange-Traded Fund (ETF)
How a single fund that holds hundreds of securities, or more than a thousand, trades on a stock exchange like one share, and what that means for diversification and cost.
Key idea
An ETF is a fund, a shared pot that owns many securities, whose shares trade on a stock exchange like any company share. One purchase gives you a slice of everything the fund holds. In Switzerland you pay its yearly fee (the TER), your broker's fee and, at a Swiss bank or broker, your half of the stamp duty on each trade: 0.15% for an ETF domiciled abroad, 0.075% for a Swiss one.
What it is
A fund pools money from many investors and uses it to buy a large collection of securities, such as shares or bonds. An exchange-traded fund, or ETF, is a fund whose own shares are listed on a stock exchange. You buy and sell them through your broker like any company share, at a price that moves during the trading day, and each one gives you a small slice of everything the fund holds.
Most ETFs follow an index: a list of companies chosen by fixed rules, such as the largest companies of one country or of the whole world. An ETF on a world index can hold more than a thousand companies from more than twenty countries: the MSCI World, a well-known world index, held 1,249 stocks from 23 countries at the end of September 2026. Buying one share of such an ETF buys you a tiny piece of each of them. Such an ETF is an index fund that trades on an exchange.
One trade instead of a hundred
Say you have CHF 10,000 and your broker charges CHF 10 per trade. Here's what it costs to spread the money over many companies yourself, compared with buying one ETF:
| Portfolio | Companies | Broker Fees, CHF |
|---|---|---|
| Shares of 1 company | 1 | 10.00 |
| Shares of 20 companies | 20 | 200.00 |
| Shares of 100 companies | 100 | 1,000.00 |
| One world-index ETF | over 1,000 | 10.00 |
Owning 100 companies one by one takes 100 trades and costs CHF 1,000 in fees, a tenth of your money, before you've earned anything. The ETF gets you more than ten times as many companies for a single fee of CHF 10, or 0.1% of your money. It isn't free, though: the fund charges a yearly fee, its total expense ratio. At 0.20%, that's CHF 20 a year on CHF 10,000.
Buying or selling through a Swiss bank or broker also incurs federal stamp duty. Under the Federal Stamp Duty Act, as of 2026, your half of it is 0.075% for securities from Swiss issuers and 0.15% for foreign ones. A fund's domicile is the country where it is legally based. Many ETFs sold in Switzerland are domiciled in Ireland or Luxembourg, so they count as foreign: buying CHF 10,000 of one costs CHF 15 in stamp duty, on top of the broker fee.
Why investors use them
Three reasons they suit private investors:
Diversification
One purchase spreads your money over hundreds of companies, or more than a thousand with a world index. That diversification means no single one can sink you.
Low cost
An index ETF needs no team of stock pickers. Three ETFs on Swiss shares cost 0.09% to 0.35% a year in September 2026.
Easy to trade
Bought and sold through a broker during exchange hours, at a price you can see before you buy.
The active vs passive investing page compares the costs of those three ETFs with those of actively managed funds.
The honest caveat
"ETF" describes how a fund is traded, not what's inside it. Next to the broad index funds sit ETFs on a single sector, on a theme such as robotics or clean energy, or on a small market. They hold far fewer companies, often charge more, and can rise and fall much harder than the market.
Leveraged ETFs go further: they aim to deliver a multiple of the index's move on a single day, such as twice. Held for longer, those daily resets can leave the result far from that multiple of the index's return, and in a market that swings back and forth they can lose value even when the index ends where it started.
Swiss note
Many ETFs trade on SIX Swiss Exchange in francs, but a CHF price doesn't make the holdings Swiss: a world ETF quoted in CHF still owns dollar and euro assets, with their currency risk. Many ETFs come in several share classes: versions of the same fund with their own currency, fees or payout. Only a class marked CHF-hedged removes most of the currency swing, at a cost. Whether a class pays out its income or reinvests it is the difference between distributing and accumulating ETFs. Before you buy, look up the ETF's holdings, TER and domicile on its factsheet.
Key takeaways
- —An ETF is a fund that trades on an exchange: one purchase buys a slice of everything it holds.
- —A broad index ETF spreads your money over hundreds of companies, or more than a thousand, for the price of one trade.
- —Costs are low but not zero: check the TER, your broker fee and Swiss stamp duty.
- —"ETF" describes how a fund trades, not what it holds: thematic and leveraged ETFs can be narrow and risky.
Related concepts
Index Fund
Copy the market instead of trying to beat it, at a fraction of the cost.
Total Expense Ratio (TER)
A fraction of a percent a year, tens of thousands over a lifetime.
Stamp Duty (Umsatzabgabe)
The small federal tax on trades through a Swiss bank.
Accumulating vs Distributing ETFs
Paid out or reinvested: what a fund does with its income, and how it's taxed.
Active vs Passive Investing
Why most active Swiss equity funds trailed the index, and what that costs.