Do you have a life insurance policy and are hesitating between different types of funds and account units to increase its performance? Do you need to secure and keep your money available through a fund in euros? Or invest part in a family of funds that are still little known that combine performance and security, the Eurocroissance funds?
Growth or Eurocroissance funds are gaining ground within life insurance contracts. Faced with the loss of momentum from the star support, the fund in euros, these funds, which have existed for almost ten years, are offered more and more often by insurance companies. The outstanding amount of the eurocroissance series has additionally increase of 37% between 2020 and 2021 from 3.3 to 4.6 billion euros. But what are they worth? And were you really interested in favoring them over classic Euro funds?
The Eurocroissance Fund, what is it?
The Eurocroissance fund was created in 2014 and is a category of funds available in multi-support life insurance contracts. Eurocroissance offer a 100% capital guarantee, which comes into effect at the end of a fixed chance of at least 8 years. Subtlety of meaning: it is necessary to distinguish eurogrowth from growth fund which is subject a partial guarantee, minimum 80% chance.
the maturity date does not mean that the capital is blocked, of course. The saver can at any time recover but does not benefit from any guarantee in case of early withdrawal. The amount withdrawn depends only on the valuation eurocroissance fund or growth fund on the withdrawal date.
You have a capital guarantee, but not on a daily basis
With the growth fund, you invest in a fund where you have a capital guarantee, not daily but at the end of a period. If you want to recover your money you can, it is not blocked. In return, you get it back at intrinsic value, confirms Stellane Cohen, chairman of Altaprofits.
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Insurance companies have for a few years offered one the majority of growth funds. As you have probably understood, unlike the euro fund which protects your entire capital at all times, the growth fund commits you to a potential loss of the invested savings… but with a safety net provided to maintain your investment over ten more years.
In 10 or 15 years you will have surpassed the fund in euros. It is a certainty.
We waives the capital guarantee anytime in any way hoping for a higher return and a generally partial guarantee at the end, says Gilles Belloir, director of Placement-direct.fr. Growth funds have existed in various forms for many years with maturities that have varied over time. [Jusqu’ prsent] growth funds did not benefit from a favorable market environment. Given the level of interest rates when they were created, insurers were often unable to commit to a full capital guarantee at maturity. The current rate rebound is a game-changer. And with an influx of payments, growth and Eurocroissance funds can diversify their investments… with the hope of significant returns in the medium term.
Higher term performance
But if my capital can be partially lost, what is the interest for me, saver? Like the units of account in your life insurance policy, which are riskier but potentially more profitable, your growth fund will definitely outperform your euro fund. When in 2021 euro funds report on average 1.30%the return of Eurocroissance and growth funds on average 2.80% according to figures from France Assureurs.
Life insurance: why eurocroissance outperforms euro funds
An opinion shared by Stellane Cohen: I am not sure that all the Euro funds in the market will see a rebound in returns in 2022. The growth fund has a long-term investment horizon and can offer a higher yield at maturity than euro funds. If you make 3% net annualis for 15 years, not bad. Funds in euros have not yielded the past 15 years, analyzes Stellane Cohen.
|Fund (and insurance company)||Performance 2020||Performance 2021|
|Long-term growth allocation (Spirica)||–||4.88%|
|G Growth 2014 (General)||3.72%||3.21%|
|Agipi eurocroissance (Axa France)||3.10%||3.10%|
|G Growth 2020 (General)||–||3.01%|
|Growth fund (Axa France)||2.60%||3%|
|Eurocroissance Project/Retirement (BNP Paribas Cardif)||0.27%||2.51%|
|Eurocroissance Patrimoine (BNP Paribas Cardif)||-1.18%||1.30%|
|Afer eurocroissance (Abeille Assurances, formerly Aviva)||2.42%||-0.14%|
Performance minus contract administration fees.
Sources: announcements from insurance companies and Goodvalueformoney.eu
Funds in euros can be used at a rate of 2% in 2022 if insurers dig into their reserves. The less reduces the gap between these funds and booklet A, adds the director of Altaprofits.
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Structured funds, a close alternative to Eurocroissance funds?
If growth or Eurocroissance funds do not appeal to you, other vehicles in the unit-linked category, such as structured funds, have similar characteristics. Like Eurocroissance funds, structured funds have an investment period that is known in advance and a partially guaranteed capital. These products are general consisting partly of a bond component to guarantee the maturity of the invested capital and of a component of risky products whose value is based on the development of a financial benchmark index (Euro Stoxx 50, CAC 40…) . The product is a little complex, but it allows considering a guarantee of the invested capital and a return of around 5%, explains Gilles Belloir.
Structured products: too tempting promises?
So who should advise a support from the Eurocroissance family? Looking for a capital guarantee during the term is not relevant for all savers, it all depends on his profile, adds Gilles Belloir. The saver must first familiarize himself with the characteristics of the support to see if it suits him. The saver must have aware that he will have no capital guarantee before maturity and that this are generally gross fees [cela signifie que les frais peuvent roger votre capital, NDLR]. So the saver might get a little less back.
What you need to remember
- Which capital guarantee? With a fund in euros, the invested money can be recovered at any time without loss. With eurocroissance, you must wait at least 8 years to be sure of getting your investment back: before this chance, if the value of the fund has fallen, you will lose part of your investment. Finally, with growth funds, a variant of Eurocroissance, in any case you are only guaranteed to get a part of your capital back… but this risk-taking can turn out to be profitable in the long term.
- Are Eurocroissance funds profitable? Impossible to read the future, but over several years they should at least (and largely) beat the funds in euros.
- Do you absolutely have to choose? The families of the life insurance funds are complementary. You can play the security of the fund in euros with part of your life insurance, bet on the medium or long term with eurocroissance on another side and finally try to take the risk of the units of account to seek results.
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