Life insurance: what results can you expect from hedge funds?

French, American or developing country stock funds… In addition to the Eurofund, current contracts offer broad stock market support, which is available from a deposit of 100 euros. However, the result is never guaranteed, as shown in 2022 by the general decline caused by the Ukrainian conflict and the subsequent inflationary shock: – 9.5% for the CAC 40, – 8.7% for the Dow Jones, – 12.3% for the DAX… Sure, during five years, most indexes are in the green, and since the beginning of 2023, stocks are slowly coming back up, for example, the Paris stock exchange has already gained more than 10%.

However, it will take several quarters to return to solid growth, with the improvement linked to the rate of decline in inflation. In order to earn in the future in the stock market, you will have to pay attention to all the criteria that determine the quality of the fund, starting with entry fees (from 0 to 3%) and performance (minimum five years), but also the target geographical area. Knowing that Asian markets have the greatest growth potential in 2023 (4% compared to 1% globally), we should not forget about them.

And the real estate sector, accessible via SCPI? It can also be subject to fluctuations, but it allows you to increase the return on your contract without having to take big risks over five to eight years. Assessment and outlook on available supports, as a bonus, a rational investment method.

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French equity funds

Possible rebound in small and medium values. The war in Ukraine, inflation, energy tensions… Due to the economic situation in France, the CAC 40 companies will not repeat last year’s performance in 2023 (profit of more than 140 billion euros). Instead, experts expect a drop in their results of 5 to 6%. The fact remains that sectors of activity that are not very sensitive to the economic situation (pharmaceuticals), poorly valued (telecommunications) or benefiting from rate increases (insurance) could still increase by 5 to 8% on the stock market.

You can invest there through general funds such as EdR Sicav Tricolore Rendement or Sycomore Francecap, which are available in many life insurance contracts. Taking another dose of risk, we can hope for better bets on small and mid-cap funds, whose index, CAC Mid & Small, has fallen significantly in 2022 (-14%). Among the quality SME funds and very widely distributed by life insurance companies: Amplegest MidCaps, Oddo BHF Avenir or BFT France Futur.


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European equity funds

Play in sectors where activity is gaining momentum. The crisis in 2022 did not spare other European countries either: – 6% in Spain, – 13% in Italy, – 14% in the Netherlands… A certain number of topics such as tourism (hotels, transport, travel agencies, etc..) would however, they were supposed to resume their activities and return to better fortunes on the stock market by the end of 2023.

Green energy and IT security are also among the sectors under surveillance. To take advantage of this trend, it is easiest to invest in funds focused on growth companies in this area, whose performance is regularly above average, such as CM-AM Europe Growth, Comgest Renaissance Europe or Fidelity.European Dynamics.


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Equity funds outside Europe

The advantage of stocks with a good yield. As in Europe, most stock markets in developed foreign countries ended 2022 in the red: – 5% in Australia, – 9% in Japan, – 15% in Hong Kong… Nasdaq, the index of American technology stocks, even gave up 33%! There will undoubtedly be a recovery in the coming months, especially in the United States, a country whose economy is showing good resistance to inflationary pressures.

However, these markets will remain highly volatile in 2023. Instead of targeting a specific region, it seems more appropriate to choose an international fund invested in income shares, capable of paying comfortable dividends, such as DWS Top Dividende (health and energy) or Global Equity Sustainable (services and technology).

China? After two dark years in the stock market (-22% in 2022), marked by the crisis in the real estate market, it is in the process of getting its head above water. India should not disappoint either, whose growth rate is expected to reach 4.5% in 2023. You can invest 5-10% of your life insurance assets there, with funds like Fidelity Greater China and EdR India.


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bond fund

It is better to bet on a “dated” fund to reduce risk. Unlike stock funds, bond funds usually do not hold any unpleasant surprises: you lend your money to issuers of securities, usually perfectly solvent countries (France, Germany, etc.), for a period of three to ten years. every quarter we receive a pre-defined interest (coupon).

Therefore, investing in these products seems reasonable. Frankly, a bad plan: not only will the returns paid out in 2023 remain 2-3 points below inflation (expected between 5 and 6%), but if interest rates continue to rise, the value of bonds already acquired will be less profitable than newly acquired bonds. created, they will mechanically decrease. In short, with this type of investment, you are more likely to lose money than to gain it.

The only good business in sight: “dated” funds, invested in private company bonds. The returns are attractive (up to 6 or 7% per annum), and since the manager undertakes to hold the securities until the capital repayment date, the only risk the insured takes is the bankruptcy of the company, which statistically occurs only 3-5% of the time.

Investment method

With monthly deposits, market fluctuations are smoothed out. Invest in the stock market at the lowest prices and sell at the highest? Even the most gifted fund managers fail to do so. So for most savers it’s mission impossible. There are better things to do to make money in the financial markets: make monthly deposits, for example 100 or 200 euros, instead of a large sum at once.

The advantage of the system, which is also offered as an option for many contracts, is that when prices rise, the fund’s shares have already acquired value, and when they fall, they are purchased at a low price. The only condition to maximize your profits is to invest regularly for a period of five to ten years, which is enough to balance the ups and downs.

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SCPI: twice as profitable as Eurofunds

SCPIs are increasingly available through life insurance, particularly from online brokers and banks, and have become very popular. By buying rental office buildings, warehouses or shops, these real estate vehicles (unlisted) can provide comfortable returns: 4.51% in 2022, twice that of the best Euro funds. It should be said that, unlike most other investments, SCPI benefits from periods of high inflation (rents are indexed to the cost of living). Of course, with stone, capital is never guaranteed. However, the risk of capital loss is low. The proof of this is that last year, despite the economic chaos, about thirty SCPIs (out of 210 existing ones) saw their share price increase, by an average of 3%.


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