The objective of classic euro funds is to provide savers with guaranteed capital and savings liquidity at all times. (Photo credit: 123RF)
Classic, pension, real estate, dynamic or even Eurocroissance funds in euros… the GoodValueforMoney.eu website analyzed the composition and financial trend of funds in euros on the market at the end of 2021.
Classic funds in euros
Classic funds in euro are the “historic” life insurance funds: according to GoodValueforMoney.eu, they represent 88% of the total existing funds in euro.
Their goal is to provide savers with guaranteed capital and savings liquidity at all times. For this they are mainly invested in low-risk and sufficiently liquid assets such as bonds.
According to Good Value for Money, at the end of 2021, they are composed on average of 77.6% bonds, 9.4% shares and 6.8% real estate. The bond portfolio is of good quality with an average rating of A+.
The average financial return of these funds is estimated at 2.45% in 2021 after 2.23% in 2020, i.e. an increase of 0.22 points thanks to dynamic assets (shares, real estate, private equity, infrastructure, etc.)
Euro real estate funds
As the name suggests, the portion invested in real estate in a euro real estate fund is greater than in a conventional euro fund. The goal is to achieve a better return with moderate risk-taking.
At the end of 2021, the share of real estate represents on average 35.1% of the assets of these funds, the rest is invested in bonds (52.1%) and shares (6.1%). The average rating of the bond portfolio is BBB+, lower than that of traditional euro funds.
The financial return in 2021 is estimated at 3.88%. In the last five years (period 2017-2021), the average financial performance of euro real estate funds has been better than that of traditional euro funds: there is a difference of 1.44% (144 cents) in favor of euro real estate funds. This can be explained by the performance of the assets of the real estate pocket but also that of the bond pocket. In fact, the higher the average rating, the lower the financial performance.
Life insurance companies voluntarily limit the development of these funds due to the very high cost of this asset class in terms of solvency margin. Furthermore, over the years, we have seen a lower relative exposure of these funds to real estate assets: it went from 55.9% of assets held at the end of 2014 to 35.1% at the end of 2021.
Dynamic euro funds
The principle of a dynamic euro fund is to be exposed to greater risk in order to try to increase the financial performance of the fund. The yield served is instead potentially less regular (sometimes it can be equal to 0%). In 2021, the average financial return of dynamic euro funds is estimated at 2.41% (compared to 2.45% for classic euro funds). On the other hand, over the past five years (2017-2021), dynamic funds have outperformed traditional euro funds by 0.32% (32 cents) per year.
Equities account for an average of 15.1% in 2021, real estate assets 11.1% and bonds 62.7%. The average rating of bonds held by dynamic euro funds is slightly lower than that of traditional euro funds, with an average rating of A -.
Retirement plan funds in euros
They are the funds in euros for individual pension contracts such as the PER, the PERP, the Madelin or even articles 39 and 83. They now represent 11% of total funds in euros.
These funds benefit from a long-term commitment by the saver (from 10 to 30 years), which allows them to seek higher returns. Their financial return is estimated at 2.97% in 2021. Over the past five years (period 2017-2021), they have generated an annual financial performance almost 0.50% (50 cents) higher than that of conventional euro funds , because they benefit from a larger diversification pocket and a more aggressive bond pocket.
In fact, they are made up on average of 69.1% of bonds (average A rating), 17.6% of shares and 8.7% of real estate.
Eurocroissance funds
The eurocroissance fund aims to be an alternative to the classic euro fund: the capital is guaranteed only on the contractual expiry date agreed with the customer (most of the time from 8 to 10 years). For this reason these funds are mostly invested in equities (21.5%). The remainder is divided into bonds (68.8%, average rating A -) and real estate (4.0%). In 2021 the average performance is 1.52%.
Source: Value-for-money site specializing in personal insurance and financial investments
