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Accumulating vs. distributing: The ETF guide for Swiss investors
Accumulating or distributing? This question concerns 9 out of 10 Swiss people who invest in ETFs. The answer to this question requires a little research.
But first of all: I have been investing in ETFs for over a decade and have consistently favoured accumulating versions for years, and for good reason: Without reinvesting the dividends, you will never reach the historical 7 - 8% per yearbut remain at a meagre 5 - 6%.
You can find out why in this article.
Table of contents
What does accumulating vs. distributing ETF mean?
Let's start at the beginning and look at the differences between the two ETFs. The difference lies primarily in the payment of dividends:
With a accumulating ETF the fund retains the distributed dividends and reinvests them. From a tax perspective, the situation in Switzerland is as followsthat you have to report the accrued income separately. In the Course list of the Federal Tax Administration you can view these.
With a distributing ETF the distributed dividends are paid out to you regularly and it is up to you what you do with them. You have to pay the tax directly after the distribution.
Here again at a glance:
| Accumulating ETF | Distributing ETF | |
|---|---|---|
| Payment of dividends | Are reinvested | Will be paid out to you |
| Taxes | Must still be declared in the tax return | Dividends are taxed directly |
| Compound interest effect | Automatic and optimal | Only if you reinvest manually |
| Administrative expenses | Lower | Higher (regular reinvestment required) |
The compound interest effect: Why 7-8% is only possible with accumulation
The previous examples already show why over 10 years ETF investments almost exclusively on accumulating variants set. The key lies in the reinvestment of dividends. With the accumulating variant, the Compound interest effect independently, which makes a big difference to profits in the long term.
If you opt for the distributing variant and do not reinvest the distributions, a significant portion of the long-term total return is lost. Historically, this has a considerable impact on your final assets: Equity indices achieve around 7 - 8 % annual total return including dividends; without reinvested dividends, only 5 - 6 % remain.
Let's look at the concrete numbers of what 2% of return difference over 20 years means:
| 5% Yield | 7% Yield | |
|---|---|---|
| Initial capital | CHF 100,000 | CHF 100,000 |
| Final capital after 20 years | CHF 265'329.- | CHF 386'968.- |
| Difference | + CHF 121'639.- |
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Why distributing ETFs reduce returns
There are several reasons why dividend-paying ETFs (and dividend strategies) reduce returns:
- Dividends land on accountDistributing ETFs are initially transferred to your account, while the Withholding tax is deducted directly. It can take a long time for you as a private individual to reclaim these (often one to two years). This slows down the compound interest effect. With accumulating ETFs, on the other hand, reinvestment is automatic, so that the compound interest effect is minimised. works faster.
- Reinvestment costs time and often feesIf you decide in favour of the distributing ETF, you take on additional time and often also fees. The Vadvantage of an ETF savings plan with accumulating ETFs lies in the fact that there are no regular to-do's.
- Timing problem: Time is also not necessarily on your side with the distributing variant. You need to think carefully about what you want to reinvest in. These delays are bad for returns in the long term.
- Psychological trapOnce the money is in your account, the chances are higher that you will spend it on something else instead of reinvesting it.
Accumulating English - What expats need to know
Anyone who invests in ETFs must also be familiar with the English terms. The accumulating ETF is called "accumulating" (ACC). The distributing ETF is called "distributing" (DIST). The English translation will also help you to distinguish between the two ETFs, as they are usually labelled as such (ACC and DIST). Otherwise you can read this in the factsheet.
⚠️ AttentionIf you are an expat or cross-border commuter, you will also have to deal with the taxation of accumulating ETFs in your country of residence. As the payout of the accumulating variants is not visible, good documentation is required.
Accumulating funds and ETFs in Germany and Austria
Accumulation funds and ETFs do not work in the same way in all countries. The tax treatment can differ considerably. Especially to Germany and Austria there are some differences.
As far as the amount of tax is concerned Germany The same tax applies to accumulating and distributing ETFs. However, in the case of distributing ETFs, the tax is due immediately when the dividend is paid out, whereas in the case of accumulating ETFs it is only due when the fund is sold - i.e. with a time delay. This increases the compound interest effect.
At Austria it doesn't matter which type of ETF you choose. The tax burden is the same. However, depending on the ETF provider, there may be delays in the reporting of distributions, which is why distributions may be taxed twice.
Accumulating or distributing - the Schwiizerfranke method
However, the fact that accumulating ETFs are the most lucrative for me and for many investors does not mean that this is a general rule. Depending on your life situation, a distributing ETF may suit you better.
The following table provides a good overview in this regard:
| Living situation | Recommendation | Reason | Swiss speciality |
|---|---|---|---|
| Under 40, wealth accumulation | Accumulating | Compound effect | No delayed reinvestment |
| Over 60, desire for income | Distributing | Cash flow | Tax optimisation on retirement |
| ETF Savings Plan | Accumulating | Automatic compound interest | Swiss broker differences |
| Pillar 3a | No matter | Not in income | Special treatment |
And we asked our Schwiizerfranke community:
67% of our 7,000 newsletter subscribers prefer accumulating ETFs!
- Reason #1: Convenience (no reinvestment necessary) - 45%
- Reason #2: Better return through compound interest - 38%
- Reason #3: Tax optimisation - 32%
⚠️ Surprise: 28% did not know that without reinvestment only 5-6% instead of 7-8% returns are possible!
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Personal insight: Why I only buy accumulating ETFs today
My first years on the stock market: Mixed portfolio
→ Combination of accumulating and distributing ETFs
→ ProblemDividends often sat in my account for weeks without earning interest
→ Reinvestment costs fees each time (e.g. CHF 5 per order)
Today: If possible, 100% accumulating strategy
→ Portfolio performance improved by an average of 0.6-1.0% per year
→ ReasonFull utilisation of the compound interest effect
→ Side effectSignificantly less effort, more relaxed investing
A concrete example from my many years of tracking:
→ Accumulating ETFsAverage 7.2% p.a. over the last few years
→ Comparable distributing ETFs (without perfect reinvestment): approx. 5.8% p.a.
→ That's a difference of several tens of thousands of francs over 10+ years!
The lesson: "Compound interest only works if EVERYTHING is reinvested!"
Accumulating ETFs are becoming increasingly popular - but are not yet available everywhere
Although accumulating ETFs are attracting more and more attention among investors, this does not mean that all ETFs are available in both versions. More and more providers are launching accumulating versions, as they are very popular in Switzerland.
My Tip is to check your top ETFs regularly. Perhaps an accumulating version is already available. Here you can find current availabilities!
Fallback strategy: What to do if only distributing ETFs are available?
Firstly, I would consider whether you really want to continue investing in this ETF or whether there is perhaps an alternative. If this is not an option for you, I would recommend automatic reinvestment of the distributions. You have to set this up manually with most brokers, which requires more time and effort on your part. If you do this promptly after distribution, you won't lose out on the compound interest effect - but you may pay more trading fees than with an accumulating ETF.
ETF sustainable accumulating - The best options
Many investors are increasingly looking at sustainability when choosing their investments. If sustainable ETFs are also an issue for you because you pay attention to environmental protection or want to exclude the tobacco industry from your investments, for example, you should pay attention to the ESG rating.
For example, there are ETFs that have the addition "ESG Screened" and thus show you that this ETF has filtered and possibly excluded its companies according to certain ESG criteria.
Examples:
UBS ETF (CH) SPI ESG (CHF) A-acc with the ISIN: CH0590186661
Amundi MSCI World ESG Leaders UCITS ETF Acc with the ISIN IE00016PSX47
Our financial tips for 2025
"Intelligent people learn from the mistakes of others".
We have compiled our top selection for you from all our tests and experience reports:
Brief summary of accumulating vs. distributing ETFs
In general, my personal recommendation is to invest in accumulating ETFs, as they virtually "work on their own" and generate more profits in the long term thanks to the compound interest effect. Depending on your life situation and investment strategy, you should of course adjust your decision again.
Exciting contributions for you:
FAQ
Accumulating Meaning: How does an accumulating ETF work?
With the accumulating ETF, your income is automatically reinvested. This means that no manual purchases are necessary, which increases your investment on autopilot.
What is the difference between distributing and accumulating?
With the accumulating version, your dividends are reinvested. With the distributing version, these are paid out directly to your account.
Are accumulating ETFs taxable in Switzerland?
Yes, undistributed income is also subject to reporting. This means that the income retained in the fund is deemed to be income and must therefore also be taxed.
Which type of ETF is better for beginners?
I recommend accumulating ETFs for beginners because they involve less effort and have the advantage of automatic compound interest.
Can I switch from distributing to accumulating?
Yes, this is generally possible by selling and buying again. In this case, however, you should observe the tax rules for both ETFs and also pay attention to the buy/sell fees charged by your broker. If you don't have a broker yet or are looking for a cheaper alternative, be sure to take a look at our broker comparison!
About the author
Eric is the founder of Schwiizerfranke.com and certified IAF wealth advisor. Since 2019, he has been helping Swiss citizens to organise their finances comprehensibly, independently and efficiently.
📌 Note: This article is for information purposes only and does not constitute personalised investment advice.