Some insurers offer you to invest in the funds the euro-growth, expected to be worth more than the funds in euros to classics. A tempting idea… but full of chausse-trapes.
When they launch in 2014, they were presented as the new engine of the life insurance. But with 1.9 billion euros outstanding at the end of 2016, according to the French Federation of insurance (FFA), the funds euro-growth are very far from having damned the pawn to the fund in euro, classical (1 450 billion).
The goal, however, was commendable, since it was the focus of your savings on a financial support marrying dynamism and security, with the promise of earning more than on fund euro classic. A new offensive commercial goes on for a few months to convince investors. Attention, to invest in a fund in the euro-growth must be an act very thought out.
complexity dreadful
All the insurers recognize that it is a product of the convoluted. Nevermind the jargon – policyholders ‘ shares of supply diversification, etc. – or on the general conditions of contracts, abstruse, to study the functioning.
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In simple terms, your savings will be split in two unequal shares. One – the largest – will be invested in a compartment safe, providing the capital guarantee at the fixed term (eight to forty years). The other will be designed to enhance the performance, therefore, placed on the stock markets.
This is the slider “time”, that is to say, your investment horizon, who will determine the allocation between investment in risky and non-risky.
Our advice : read patiently any proposal that you make. The key is your investment horizon : the do you really know ?
A guarantee artificial
With a fund’s euro-growth, your capital is not guaranteed in the term of the commitment. It is eight years, at a minimum, forty years at most, according to the offers on the market.
Example : you invest 10 000 euros with a time horizon of twelve years. That term, the insurer guarantees you a minimum the restitution of this sum. Reassuring, but misleading. And for a good reason : taking inflation into account, your 10, 000 euros will necessarily have lost their real value.
In addition, this guarantee applies on the net capital charges on payments (except in the Afer). Example : with 3 % fee, not more than 9 700 euros, which are insured !
And if you recover your assets in the meantime (which is possible via a withdrawal), this will be done at their market value, at the risk of leaving feathers.
This is not all, you also need to take care of the level of capital guarantee chosen. The regulation allows insurers to provide you with a 100% guarantee (we’re talking about funds euro-growth), which can be lowered by up to 80 % (so we are talking of funds, “growth”).
Our board : let’s be clear, for a permanent guarantee of your capital, opt for a fund in euros classic well-chosen. For investment horizons of ten years or more, the argument of the guarantee capital is so fictitious that it becomes secondary.
performance unpredictable
In 2016, the funds euro-growth have pushed the slider of the performance up to 6,87 %. Encouraging. And tomorrow ? “We are convinced that the euro-growth will provide greater gains to the funds in euros to classics on the shelf,” explains Sonia Fendler, a member of the executive committee of Generali France, in charge of the customer’s property. It is a promise to the customer very credible, our first results show. The schema is quite simple : the more the insured agrees on the long term, by opting for a guarantee capital lying around twelve-fifteen years, our management will be dynamic and, therefore, a source of financial performance.”
Excess of trust ? In any case, some rates have been pschitt in 2015 and 2016 as at BNP Paribas, after jumping more than 10 % in 2014. In reality, the developments of the euro-growth will be by nature quite volatile.
Attention, the data announced, reflecting the results of the fund, not what you touch on an individual basis and that depends on your investment horizon. Above all, please understand that the gains are not acquired from one year to the other.
Our board : sparing warned, if your contract shows performance very satisfactory for a few years, you don’t have to go to the term planned. Make a withdrawal or arbitration to achieve a nice gain. If you invest in the horizon, fifteen or twenty years, other financial instruments that offer more interesting perspectives in the context of life insurance.
higher costs
Like on any life insurance, leveraging on the funds the euro-growth, you’re going to pay a fee on payments. Allow 2 to 4 % on the current offerings. Regarding management fees, the note is saltier with a rate close to 1 % per year or more to 1.20 % in Generali, 1.25% or a total of 1.55 % for BNP Paribas).
Less noticeable, some insurers will also nibble on the “income” of 10 % (Credit Agricole) 15 % (Generali), which is akin to a management fee in disguise. No matter what, we will they say, what counts is the net performance is attributed to customers !
Our board : the euro-growth is expensive. This cost is justified in view of the results ? Negotiate also the expenses on payments, because the guarantee covers the net capital paid (except in the Afer).
Of professionals who are very r&comte;servés
Faith of our investigation, it is difficult to find insurers packaged by the euro-growth. “It’s a great idea that came at the wrong time,” says one of them. The timing of the launch has been very bad. The context of very low bond yields for several years – around 1 % to the rate on ten-year government – makes it complicated to active management of the fund, the insurers are obligated to enforce the secure compartment of the contract to keep the guarantee at the end. This leaves little room for performance improvement.
Our board : there should be a level of bond rates to be much higher to give all its potential to fund euro-growth.In this case, the insurers could use a larger share of your savings to invest on the financial markets. This is not the case for the time being, the inconvenience is obvious. Where the reserve of professionals. And ours.
A looting assumed
This is the story of a hold-up legal. At the end of last year, the State has allowed insurers to transfer a portion of the unrealized capital gains of their funds in euros to classics to their funds euro-growth.
Some governments have resorted to in 2016, as the Afer or Generali. Admittedly, the amounts drawn on the fund in euro classics are ridiculous, this corresponds to a loss rate of unrealised gains of 0.1 % (Afer) or 0.02 % (Generali).
In return, the transfer generates significant gains for the fund euro-growth due to their low stock. In practice, insurers have put this sum in reserve to support the future performance of the euro-growth.
Our board : in the name of what an insurer can-it pump into the trunk of the investors who have invested on the fund in euro classics ? Unfair, the measure is, however, assumed by the companies. Including by the association for the protection of investors Afer. What to add to the confusion that weighs on the allocation of the returns of the life insurance.
A future in dotted lines
“Even if the current context of low interest rates is not favourable to its development, we remain convinced that the euro-growth is an investment for the future, analysis Benedict Gommard, head of strategy clients of BNP Paribas Cardif. For proof, it will be accessible to our clients in all of our contracts are multi-purpose by the end of the year.” So much the better if this new financial offer is no longer available. But it may be of interest to some investors. Only 14 % of French people have “heard” of the euro-growth according to a survey for the FFA (march 2017).
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Our board : isn’t it urgent to wait ? New political situation requires, the future of the euro-growth remains to be written.
