Unsurprisingly, euro funds in 2021 will have offered an average return estimated at 1.1%, down, as has been the case for many years. These supports, mostly invested in bonds, reflect the performance stones of interest rate markets.
1.1% on average, before tax and without counting inflation! This is the estimated average return on euro funds for life insurance contracts. A slow, more regular descent, why quite specific support, which offers a guarantee in capital.
Euro funds: a way of more than 1.3 trillion courses …
Life insurance is one of the favorite products of savers, as this medium has a very advantageous taxation, both in terms of the taxation of earnings and the succession regime.
And the euro fund, which offers the protection of invested capital and a click-through effect on past performance, has long captivated investors: over a global exchange rate of nearly € 1,800 billion, more than € 1,300 is being invested in euro funds! The rest, € 400 billion, is placed in “Units of Account”, ie finance invested in the financial markets or in real estate. These funds allow for better long-term performance, but do not offer a capital guarantee every year.
The euro funds, on the other hand, are, for the most part, invested in bonds in order to guarantee the capital invested. Only a small part (less than 15%) is diversified into equity or real estate investment products, which allows, in good years, to double the rate served to policyholders.
… But a yield that more often protects us from the effects of inflation
Insured persons who have received, or will soon receive, their annual summary, thus risking being disappointed with the return on their funds in euros. Moreover, around this “small” average, while some contracts still manage to display higher rates (some of which exceed 2%), others are naked and fail to cross the 1% mark! Therefore, with inflation rising to 1.6% at an average rate over 2021 (and 2.8% year-on-year last December), the real rate is therefore negative.
It is then necessary to deduct the social levies, of 17.2%, and possibly the tax on exit according to the age of the contract and the capitalized amount.
Conditional “discounted” rates
For some contracts, the return on euro funds is variable: if you agree to invest a significant part of your savings in Unité de Compte, the return on euro funds goes up! Because insurers are primarily looking to “decorate” individuals to invest too much in these funds. There are two reasons for this: on the one hand, it depends on their solvency ratio, and on the other hand, in the long run it is strongly advised to diversify your investments. In fact, some new contracts no longer allow 100% investment in the euro fund.