Formula funds have become the stars of the commercial networks of financial institutions.
Indeed, there are few brands that do not offer them, whether in a simple securities account, a stock savings plan or, most often, under a life insurance policy.
On paper, these products have almost everything to please: easily accessible, a few hundred euros are enough, they promise to make you participate in the rise of the stock market while enjoying after a few years (5 to 8 years in general) of a guarantee or protection of the capital.
Obviously, the reality is generally less glowing and their final performances are often disappointing. It is also by one of these funds, Bénéfic, of the Bank Postale, that arrived one of the biggest scandals of the popular savings … when the subscribers realized that they had lost 30 to 50 % of their stake when they thought they did not take any risk.
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A RANDOM WARRANTY
Before succumbing to one of these products, it is, therefore, necessary to take a lot of precautions and to try to understand how they work.
The first point to consider: the warranty. When it exists, it is never permanent. It is necessary to wait until the end of life of the fund – 4 to 8 years – to benefit from it. Thus, any saver who withdraws his money before maturity may lose part of his stake.
It should also be known that many of these funds are not guaranteed, only “protected”. In other words, the financial institution agrees to repay the amount invested provided that the market does not fall beyond a certain level, usually 40 or 50%.
If the stock market slips more widely, all securities fly away and the loss is at least equal to that of the markets. Although the risk seems low today given the level of the indices, it is to be taken seriously.
Second important point: the performance. This is very variable from one product to another. Some commit to giving part of the rise of a stock index (75% for example, but without dividends), others calculate it according to the average valuation of a basket of shares; others – especially those sold in the wealth management universe – provide for the payment of a high coupon, sometimes more than 10%, if the stock market stagnates or progresses.
But in general, these funds “coupons” provide for an early repayment if this scenario is realized. Thus, in 2012, several of them launched the previous year were reimbursed in advance with the high coupon, because the stock indices were higher than their original level. Too bad for the saver who thought to receive a high return for several years.
“We do not advocate this type of products to our customers, especially as they are very difficult to understand, although there are serious companies and well-designed products, ” warns Jean-Pierre Rondeau, president of Megara Finance.
To make sure of this, you must immerse yourself in the information leaflet. And if you do not understand it – which sometimes happens to professionals – the easiest way is not to subscribe to it.