You have a Savings plan It’s up and running. Every month, CHF 200 goes into an MSCI World ETF. The app shows «0.47 units». Everything’s fine.
Until you ask yourself: What do I own at Fractional shares resp. Fractional Shares actually?
Good question. Most broker comparison sites don’t answer it. We’re going to do that now.
The short answer: depending on the broker, you own something completely different. With IBKR, you are the beneficial owner. With Swissquote, you hold a fiduciary interest which automatically converts into a full share. Other providers do not offer fractional shares at all.
You won’t notice any difference in your day-to-day life. It only becomes relevant in three situations: when you switch your investment account, when you want to vote at an annual general meeting, or when your broker runs into financial difficulties.
This article explains the three custody models, the conversion mechanism that makes all the difference, the Lindt stress test, and what happened to fractionals during the FlowBank bankruptcy in 2024. It concludes with a clear recommendation.
| Provider | Model | Automatic conversion | Fractions can be carried over |
|---|---|---|---|
| Interactive Brokers | Beneficial Ownership | Not necessary (segregated from fractions) | No |
| Swissquote | Trust | ✅ Yes, automatically | No |
| Yuh | Custody via Swissquote | ❌ No | No |
| eToro | Segregated Omnibus | ❌ No (no conversion mechanism) | Restricted |
| Saxo Bank | No fractional shares | ||
| DEGIRO | No fractional shares | ||
| neon invest | No fractional shares | ||
| Zak Invest | No fractional shares (managed portfolio) | ||
Fractional shares are fractions of shares or ETFs. Rather than buying a whole Tesla share for CHF 350, you buy around 0.14 shares for CHF 50.
That sounds trite. But it isn’t.
An ordinary share is clearly defined in legal terms. A fractional share is not. Under traditional company law, fractional shares simply do not exist. Each broker must decide for themselves how to account for a fraction in their books and contracts. This is precisely where the differences begin.
Interactive Brokers (IBKR) Fractional Shares are expressly referred to as «beneficial ownership» in the client agreement. The fractions are held in segregated accounts, just like whole shares.
This means that you are not directly entered in the share register. The broker remains the legal holder. However, the economic rights – that is, capital gains and dividends – are contractually yours. And this applies from the very first fraction, without any conversion process.
There is one catch, however: fractional shares held with IBKR cannot be transferred to another broker. If you switch brokerage accounts, you must sell the fractional shares beforehand.
That’s the Swiss standard, and this is where it gets interesting.
Swissquote holds the shares in trust on behalf of its clients. As long as fractional shares have not yet been aggregated to form a whole share, they are held in a trust arrangement. As soon as enough fractional shares have been accumulated, Swissquote automatically converts them into a fully booked share position. This is documented on the Swissquote product page for the Savings Plan.
From this point onwards, the position is regarded as a genuine deposit asset. Article 37d of the Banking Act applies. In the event of bankruptcy, it is set aside and returned; it is not subject to pro rata distribution.
Yuh uses Swissquote as its custodian. Yuh Legal’s response on this point is clear: at Yuh, there is no automatic conversion to a directly held share, even if the fractions add up mathematically to a whole unit.
In practical terms, this means that although 4 × 0.25 technically amounts to 1.0 share with Yuh, it remains, in legal terms, a fiduciary holding. Swissquote Bank AG or a sub-custodian remains the owner or registered holder. The customer has a proportional economic entitlement.
Important: Yuh also confirms that, in the event of bankruptcy, these assets are generally covered by Article 37d of the Banking Act and do not form part of the bankruptcy estate. The difference compared with Swissquote therefore lies not primarily in whether or not there is «protection», but in the structure: at Swissquote, entire units are automatically recorded as standard book-entry securities. At Yuh, the model remains permanently fiduciary.
Saxo Bank Switzerland does not offer fractional shares in AutoInvest. Only whole units are purchased.
DEGIRO According to the official FAQ, it does not offer fractional shares.
neon invest According to the product documentation, it does not have a fractional mechanism. Savings plans are based on whole units.
Zak Invest (Bank Cler) is a managed ETF portfolio product. You buy units in predefined strategies, not individual shares or ETFs on a fractional basis.
For the sake of completeness: eToro offers fractional shares in a segregated omnibus account, but without a conversion mechanism – fractional shares remain fractional shares permanently. This is less relevant for Swiss investors who focus on regulated Swiss providers.
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This is where most comparison articles become superficial.
Under a trust model, your position remains a contractual claim against the broker until a full share is credited to your securities account. With automatic conversion, the fractional share becomes a regular position in your securities account.
Whether that happens depends on the conversion mechanism.
Swissquote converts automatically. Fractions are aggregated as soon as they amount to a whole share. The position becomes the actual portfolio value. That is the protective aspect.
Yuh does not carry out any automatic conversion. Yuh Legal confirmed this when asked. Even though fractions add up mathematically to form a whole unit, the position remains a fiduciary share. This differs from the standard Swissquote offering.
It’s not the end of the world. Yuh confirms that the underlying securities are held by Swissquote on a fiduciary basis on behalf of its clients and, in the event of insolvency, are in principle covered by Article 37d of the Banking Act. However, the client is not registered as the owner, has no voting rights and remains permanently within the fiduciary model.
In short: with Swissquote, the fractional share eventually becomes a standard portfolio holding. With Yuh, it remains a fiduciary claim.
With IBKR, conversion isn’t an issue, because segregated custody applies from the very first fraction.
The practical question for any savings plan is: will my fractional share eventually become a fully registered security, or will it remain a fractional share indefinitely?
Depending on the market conditions, one share in Chocoladefabriken Lindt & Sprüngli AG costs roughly CHF 100,000. We will use this in our examples.
Anyone who saves with Lindt each month will need one whole share:
The conversion threshold is effectively unattainable for virtually every Lindt savings plan. The position remains permanently in ‘fractional’ status.
By way of comparison: an MSCI World ETF costs between CHF 80 and CHF 150 per unit. If you invest CHF 200 a month, you’ll own the whole unit in just a few weeks. A short transition period, then full protection.
The situation is different for Lindt, Givaudan or Berkshire Hathaway A. Anyone building up a substantial holding in these shares via a savings plan should ask their broker to confirm in writing the legal status under which the fractional shares are held. Without this confirmation, it is better to wait until you can buy whole shares or to avoid the stock altogether.
Despite all this, the verdict on fractional shares is clearly positive, provided they are used correctly.
Imagine you have a ETF Savings Plan Invest and save CHF 1,000 every month, allocating 60% to the MSCI World, 25% to emerging markets and 15% to the SPI. With Fractionals, this plan is executed exactly as intended: CHF 600, CHF 250, CHF 150, down to the last cent, fully invested.
Without fractional shares, cash goes to waste. The allocation is never quite right. You buy whatever you can afford in whole shares, and the rest has to wait until next month.
If you’re disciplined, you’ll top up your holdings manually and avoid cash drag. But that takes time, is stressful and involves extra transactions. Fractional shares eliminate precisely this friction.
An important point regarding ETF funds:
ETF units are legally classified by the fund provider as Special assets separate from their own assets. Even if iShares or Vanguard were to go bankrupt, the fund’s assets would not form part of the bankruptcy estate. This applies regardless of whether you hold a fraction or a whole unit.
What changes with the fraction is the Path Regarding this protection:
For the standard ETF savings plan with monthly contributions starting at CHF 100, this is hardly relevant, as the conversion process is quick for typical ETFs. For very small amounts invested in expensive thematic ETFs, it is worth checking with your broker.
Section 37d of the Banking Act stipulates that securities held in custody must be set aside and returned to customers in the event of a bank’s bankruptcy. Your shares belong to you, not to the bank, even if they are held in the bank’s custody account.
In addition, Article 19 of the Book-Entry Securities Act sets out what happens in the event of a shortfall, i.e. when the securities held in custody are insufficient to cover all client claims.
Important: According to Yuh, the protection afforded by Article 37d expressly applies to fractional shares as well. They do not form part of the bankruptcy estate. The key difference between fractional shares and whole shares lies elsewhere: in their transferability.
| Full share | fraction | |
|---|---|---|
| Excluded from the bankruptcy estate | ✅ Yes | ✅ Yes |
| Can be transferred directly to a new broker | ✅ Yes | ❌ No |
In the event of bankruptcy, whole shares can be transferred directly to another broker. Fractional shares must either be sold or transferred as fractions to a third-party custodian, where they will continue to be held in trust. Whether this proceeds smoothly in individual cases depends on the custody model and the liquidation procedure.
In practical terms, this means that even with fractional shares, you won’t lose your money. However, a direct transfer of securities is often not possible. Depending on the procedure, the fractional shares may need to be sold or transferred to a third-party custodian.
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On 13 June 2024, FINMA opened bankruptcy proceedings against FlowBank SA. The grounds were a failure to meet minimum capital requirements and well-founded concerns regarding excessive indebtedness. Walder Wyss SA, Geneva branch, was appointed as the bankruptcy liquidator.
What happened next was a real lesson.
Around 12,500 whole securities positions were transferred to other brokers by the end of November 2024. These included whole shares, ETFs and funds. From October 2024, clients were also able to sell their securities via FlowBank e-banking; the proceeds were paid into a segregated account outside the bankruptcy estate.
The situation was different for fractional shares. Fractional shares could not be transferred directly to another broker. According to the liquidator’s communication with clients, they had to be either sold or transferred as fractional shares to a third-party custodian. The proceeds or the position accrued to the clients, not to the bankruptcy estate. However, a direct transfer between custody accounts was not possible.
The implication is this: in the event of an emergency, it is not simply a question of whether you are formally the owner. The question is whether your position in the share will be transferred to a new broker or converted into cash. At FlowBank, whole shares were transferred; fractions were not.
Dividends. With almost all reputable providers, you will receive a pro rata dividend payment. For US dividends, withholding tax is deducted without a W-8BEN form (30%), but is processed correctly with a correctly completed form 15%.
Voting rights. With the brokers considered here, fractional shares generally carry no voting rights. In the case of Swiss registered shares, an entry must also be made in the Share register required. In the case of Swiss registered shares, this applies only after entry in the share register.
Transfer of securities. At IBKR, Swissquote and Yuh, the following applies: Fractions of shares are not transferable. You must either sell them before transferring your securities account or top up your holding until you have a whole share. Whole shares can be transferred as normal.
Corporate actions. Share splits and takeovers are usually handled on a pro rata basis by the broker. When it comes to more unusual transactions, such as rights issues or spin-offs, brokers handle them differently. Some do not offer them at all, whilst others pay out the proceeds on a pro rata basis.
In short: Fractional shares give you a financial stake in the company. You only have the full rights of a shareholder once you own a whole share.
| Provider | Fractionals? | Model | Conversion to a whole share | Transferable |
|---|---|---|---|---|
| Interactive Brokers | Yes | Beneficial Ownership | Not necessary (segregated from fractions) | No |
| Swissquote | Yes | Trust | Yes, automatically | No |
| Yuh | Yes | Custody via Swissquote | No | No |
| eToro | Yes | Segregated Omnibus | No (officially confirmed) | Restricted |
| Saxo Bank Switzerland | No | - – | - – | - – |
| DEGIRO | No | - – | - – | - – |
| neon invest | No | - – | - – | - – |
| Zak Invest (Bank Cler) | No | Managed portfolio | - – | - – |
You can find the detailed fees in our Online broker comparison. Here are just the points that are specific to fractional.
Stamp duty: This also applies to fractionals if the trade is executed via a Swiss securities dealer. The amounts involved are small in absolute terms, but they do not disappear.
IBKR: The commission, which starts at around USD 0.005 per share, has a minimum charge. For very small fractions, this can work out quite expensive in percentage terms.
Yuh and Swissquote: The relevant savings plan fee structure applies. Yuh advertises selected ETF savings plans with zero trading fees plus federal taxes. The Swissquote Savings Plan starts at CHF 3 per trade, including fractional trading.
Withholding tax on US dividends: 30% without a W-8BEN, 15% with the form correctly completed. Applies to fractions of shares in the same way as to whole shares.
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Fractional shares are a useful tool for investors in Swiss savings plans – provided you use them correctly.
Used correctly, this means: an ETF savings plan, mid-priced shares, and automated allocation. In this case, fractional shares are the tool that makes the savings plan both precise and hassle-free.
The key point is not whether you use fractionals, but rather Which broker offers you automatic conversion to the actual share?. Although fractional shares are protected under Article 37d of the Banking Act even in the event of bankruptcy, they cannot be transferred directly to a new broker.
Yuh: No automatic conversion, but fiduciary protection against set-off in accordance with Yuh Legal ⚠️
One notable exception: Anyone wishing to invest in individual shares priced at over CHF 10,000 (Lindt, Givaudan, Berkshire A) via a savings plan should obtain written confirmation from their broker regarding the legal status of fractional shares. The conversion threshold is effectively unattainable. Without confirmation, we would omit the share.
The next step: Send an email to your broker’s support team with a single question: «Will my fractional shares be automatically converted into a fully booked share position as soon as they reach one whole share?» Keep a record of the reply.
For a typical ETF savings plan, we recommend Swissquote. Trust-based model, regulated throughout Switzerland, conversion to ordinary shares publicly documented, automated savings plan.
Three reader profiles, three answers:
You can find the full broker comparison here: Online Broker Comparison: Switzerland.
What we don’t do: build up positions in Lindt, Givaudan or Berkshire A shares via fractional savings plans. The legal framework is too flimsy. It fails the ‘friends and family’ test.
No investment advice.
Fractions of shares or ETFs. You invest a fixed amount, and the broker buys the corresponding fraction, even if it is less than a whole share.
In normal circumstances, yes. The risk arises in the event of bankruptcy: whether your position is treated as a portfolio holding or as a claim depends on how your broker structures the fractions and whether a conversion takes place.
Swissquote automatically converts fractions into a fully recorded share position as soon as they add up to a whole share. This does not happen with Yuh.
Even if your Yuh fractions amount to 1.0 share in mathematical terms, they remain a fiduciary holding according to Yuh Legal. According to Yuh, the bankruptcy protection under Article 37d of the Banking Act (BankG) generally applies regardless. The main differences lie in conversion, ownership registration, voting rights and transferability.
That is the core problem with extremely expensive shares such as Lindt & Sprüngli. The position remains permanently in fractional form. Whilst fractions do not form part of the bankruptcy estate, they cannot be transferred directly to a new broker in the event of a crisis. You receive the proceeds from a sale, not the position itself.
Yes. Swissquote explains this on the Savings Plan product page: fractional shares are aggregated into a full position as soon as they amount to a whole share.
No. Yuh Legal has confirmed that there is no automatic conversion into a directly held share. The position remains, on a permanent basis, a fiduciary economic claim against Swissquote or the underlying custody model.
In short: No. With IBKR, Swissquote and Yuh, the rule is: sell any fractional shares before transferring your account. Whole shares can be transferred as normal.
Not with most providers. Voting rights are only granted for a full, fully registered share; in the case of Swiss registered shares, they are also only granted once the share has been entered in the share register.
In accordance with Article 37d of the Banking Act, fractional shares are also excluded from the bankruptcy estate. The difference compared with whole shares lies in their transferability: whole shares can be transferred directly to a new broker. Fractional shares must either be sold or transferred as such to a third-party custodian. The FlowBank bankruptcy in 2024 illustrates this in practice.
This is technically possible with Swissquote and Yuh. However, a Lindt share costs roughly CHF 100,000, depending on market conditions. At CHF 100 per month, it would take around 83 years to accumulate a full share. The conversion mechanism effectively never kicks in. We do not recommend this.
Yes, that’s actually their strongest argument. Only with fractional shares can you distribute a fixed monthly amount across several ETFs seamlessly, according to a predefined weighting, without any cash left over. Read more about this in our Guide to ETF Savings Plans. The conversion issue is minimal for typical ETFs with unit prices between CHF 80 and CHF 150.
Yes. Capital gains are tax-free for private investors. Dividends must be declared in your tax return. Stamp duty is payable where applicable.
We are not lawyers. The legal information in this article is based on the official statements provided by the providers and the text of Swiss law (Art. 37d of the Banking Act). Anyone investing large sums in fractional shares of high-value Swiss shares should discuss the matter with a specialist lawyer.
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.
Thank you very much for following up on the matter of FractionalShares at Yuh! Unfortunately, my support enquiry wasn’t answered in such detail.
I find the response somewhat unsatisfactory, and I’m wondering whether I should continue to invest in the FTSE All World High Dividend ETF via a regular savings plan if all the units aren’t held as ‚whole shares‘… Consequently, I won’t be rounding up my 3–4 individual share positions to 1 share either, as no conversion takes place anyway.