Trackers and ETFs Stock Market: Guide to Investing and Selection of the Best PEA ETFs

ETFs, also known as trackers in France, can be used to position yourself easily and cheaply in the stock market. Insidecrypto introduces you to how trackers work and their characteristics, the many advantages of investing in this type of listed fund, and gives you all the possible investment strategies in the video “How to invest in the stock market with ETFs.”

Also discover our selection of the best PEA ETFs for the end of 2022 to take advantage of the growth of the American technology sector, take an interest in the European value segment, invest responsibly and sustainably, or even bet on French companies in the stock market.

Exchange-Traded Funds (ETFs), or trackers, are exchange-traded funds that trade like a stock. They were created in the United States in the mid-1990s and have been present on the European market since the 2000s. Stock market ETFs aim to replicate the performance of an underlying asset or a basket of underlying assets, which can cover a very broad asset class, with the supply having grown considerably over the past 25 years.

First-generation ETFs: trackers replicate major stock market indices

First-generation ETFs replicate major stock market indices and, at the very beginning, only the major U.S. stock market indices (S&P 500, Nasdaq, etc.) Today, all major global stock market indices are accessible and the French particularly favor ETFs that allow them to position themselves on the CAC 40.

Second-generation ETFs: trackers replicate sector and thematic

2nd generation ETFs replicate sector indices. They allow you to position yourself in an entire sector without having to choose a few stocks. The diversification allowed by this type of ETF can be very positive for the investor. For example, in the event of an oil spill from a TotalEnergies ship, an investor positioned in the energy sector will suffer much less from the market downturn than a TotalEnergies shareholder. We can also highlight the existence of thematic ETFs that will go even further than sector ETFs in precision, offering the possibility to invest in space conquest, decarbonization or electric vehicles for example.

Third-generation ETFs: trackers replicate bond market indices and commodities

Third generation ETFs replicate bond market indices, based on bonds. In 2021, this type of ETF will still account for more than $1.2 trillion in investment worldwide compared to less than $300 billion in 2014. According to BlackRock’s estimates, the bond ETF market should be worth $5 trillion by 2030. During the same period, the first ETFs replicating the value of major commodities such as gold, oil and some agricultural commodities appeared.

Smart ETFs: Smart Beta ETFs to implement sophisticated investment strategies

Smart Beta ETFs allow you to implement sophisticated investment strategies. For example, they replicate a purpose-built index that is not weighted by market capitalization, but by various outperformance factors. They can also be a way to manage risk within a portfolio. For example, a ” lowvol ” ETF is one whose index is composed of companies with lower than average volatility.

The latest generation ETFs : Actively managed ETFs

Finally, the latest generation of ETFs, Actively managed ETFs, are a new category of ETFs that emerged after 2018 and are closer to how a hedge fund is managed. Like most ETFs that are passive investment products, this new type of ETF even allows for “day trading” type strategies. Unlike other types of ETFs, the composition of the ETF is not always transparent due to day-to-day changes.

The Bitcoin ETF: a novelty that appeared from 2021

While the entire crypto community has been waiting, since 2018, for the arrival in the US of a Bitcoin ETF; it is now a done deal as the SEC (Securities and Exchange Commission) has authorized the issuer ProShares to list the “Bitcoin Strategy ETF – BITO” on the NYSEarca (the derivatives exchange of the New-York Stock Exchange).

A few details about this ETF anyway: it tracks the value of Bitcoin “futures” (or forward contracts) on the CME. It also incorporates, for more than 3% of its composition, US Treasury bills. So this ETF does not hold any Bitcoin, but Bitcoin futures contracts. An important notion to take into account when we know that Bitcoin “futures contracts” erode performance over time, so much so that over the year 2021, an investor in Bitcoin “futures contracts” would have had a shortfall of almost 40% compared to a classic bitcoin investor.

This is still good news for the democratization of Bitcoin, as the SEC had previously rejected all Bitcoin ETF applications, including those from Proshares, GraniteShares and Direxion in August 2018.

From now on, U.S. investors will be able to choose to invest in bitcoin via this ETF, and as part of their pension funds. Institutional investors will also be able to more easily allocate a portion of their portfolio to Bitcoin investments.

The ETF will be available to investors in the U.S

While Bitcoin ETFs only exist in the United States, have appeared in Europe for a few years now, physically collateralized Bitcoin ETPs listed on Euronext Paris that provide exposure to cryptos with products in the same family as ETFs.

Physical or synthetic replication of a stock market ETF

Unlike a mutual fund that is actively managed by a fund manager, most ETFs fall into the passive management category.

To replicate the returns of a benchmark index, two cases exist: physical replication where the ETF manager simply buys the assets that make up the index, whether stocks or bonds, or synthetic replication where the ETF manager enters into a performance swap agreement (or swap) with an investment bank. The manager receives the performance of the index in exchange for the performance of the assets it holds in its portfolio.

Synthetic replication ETFs offer the advantage of a lower “tracking error,” meaning a smaller performance gap with the benchmark. The manager of an ETF with physical replication will indeed have to make purchases and sales of securities that will incur brokerage fees, which will be deducted from the final performance of the ETF.

The ETFs with physical replication will have a lower tracking error than those with synthetic replication

In contrast, physically replicated ETFs offer the guarantee that the issuer actually owns the securities that comprise it, and sometimes pay dividends.

Note that the mode of replication can also come into play for PEA eligibility criteria.

The top issuers of ETFs and trackers

Among the largest European ETF providers, we can cite :

• iShares
• Xtrackers
• Lyxor
• UBS
• Amundi
• Vanguard
• State Street
• Invesco
• Wisdom Tree
• BNP Paribas
• Legal & General
• Franklin Templeton

In recent years, new players have also entered the market with innovative ETF proposals, such as HANetf, RizeETF and Global X.

Understanding the name of an ETF

In the vast majority of cases, the tracker name begins with the name of the ETF issuer (Lyxor, Amundi, iShares, BNP Paribas, etc.)

Then, the ETF name indicates the replicated stock index with sometimes an applied strategy theme (Nasdaq, CAC 40, DAX 30, ESG, Value/Growth strategy, etc.), as well as an indication regarding the index type (PR = Price Return, DR = Dividend Reinvested with NR = Net Return or TR = Total Return).

The name UCITS refers to a European directive aimed at harmonizing financial markets (e.g., the fact that another investment fund may not exceed 20% of the ETF’s holding or that a single asset may not exceed 10% of the ETF’s total composition).

Finally, it is also often mentioned at the end of the ETF’s name as “Acc” or “Dist”. This refers to the ETF’s dividend distribution policy:

• “Acc ” or ” C ” means that dividends are capitalized ;
• ” D ” or ” Dis ” or ” Dist ” means dividends are distributed.

Decrypting the name of an ETF

If we take the example of the ETF Lyxor MSCI EMU ESG Trend Leaders (DR) UCITS ETF – Acc here is the decoding of the name of this ETF :

• Lyxor : name of the issuer
• MSCI EMU ESG Trend Leaders : indication of the replicated benchmark and strategy
• (DR) : dividends reinvested (for the benchmark)
• UCITS ETF : meets the UCITS directive
• Acc : dividends from the ETF are capitalized.

The different fees of an ETF

Beyond the brokerage fees for buying and selling securities, which vary depending on the different brokers, there will also be other fees to consider.

Generally, ETF issuers charge only an annual management fee, which is called the TER (Total Expense Ratio). This fee, quite often relatively small, is built into the buy and sell prices of the security. So when you see that an ETF costs 15 EUR, the management fees are already integrated in the price of the ETF. It is therefore the annual performance that is reduced by the amount of the management fee. For example, if the CAC40 has performed +10% over the year and the CAC 40 XY ETF charges a 1% TER, then the performance delivered by the ETF will be +9% over the same year.

The TER can be higher than 1% for leveraged ETFs or even ” Actively Managed ” ETFs. The latter can sometimes (but very rarely) incorporate a performance fee as well (e.g., 10% of performance).

Much more difficult to measure are the foreign exchange fees that the issuer will pay when it buys or sells foreign stocks comprising the ETF. In this case, we will only be able to see a larger ” tracking error ” which may be the result of large currency fees.

Finally, and since liquidity is mainly managed by a Market Maker, we will be able to look at the bid-ask spread and check that it is not too wide. Depending on the institution that manages the market making, we will be able to find spreads that are more or less narrow; which constitute in large part the remuneration of the market maker.

Buying ETFs in a PEA, securities account, PER or life insurance

You can’t talk about costs without talking about taxation, and fortunately, there are plenty of tax wrappers available to ease the tax burden on ETF profits.

Buying ETFs with a PEA

Well known to more or less seasoned stock marketers, the PEA allows you to be exempt from capital gains tax provided that the PEA has been open for at least 5 years and that no withdrawal of funds has taken place during these first 5 years. It is of course possible to buy and sell ETFs at will, but in order to benefit from the tax advantage, you will have to keep the sums resulting from these transactions in the PEA (the capital gains will be paid into the cash account and you will be able, if you wish, to use these sums to buy other securities). Indeed, to be exempt from capital gains tax, you will not be able to take money out of this envelope during the first 5 years.

The maximum payment limit on a PEA is €150,000.

Not all ETFs are eligible for the PEA, and the easiest way is to check with the issuer by looking at the data sheet and the key investor document to verify PEA eligibility. In principle, PEA-eligible ETFs are those invested in the shares of French companies and companies that are members of the European Economic Area (excluding Lichtenstein).

There is, however, some flexibility that allows an ETF to be PEA-eligible if at least 75% of its component assets meet the above criteria. Thus, through the use of a mix of physical and synthetic replication, some issuers manage to make ETFs offering exposure to foreign markets eligible for PEA.

There is a certain flexibility that allows an ETF to be eligible for PEA if at least 75% of its component assets meet the above criteria

Buying ETFs with a PER

For investors who wish to invest in a staggered manner with an initial payment followed by a series of scheduled monthly payments in order to prepare for retirement while benefiting from tax advantages, the PER (Plan Epargne Retraite) in free management seems quite suitable.

Thus, the investor will be able to deduct the payments made on his PER from the amount to be declared for income tax purposes. On the other hand, the tax advantage will not be able to exceed 10% of the total income over the year.

The tax advantage is not limited to the amount of the investment

In principle, the funds paid into the PER can be recovered at the time of retirement, in the form of a capital exit or an annuity.

There is no maximum limit for payments, but quite often a minimum monthly payment amount is mandatory.

The fees and conditions of PERs can vary greatly depending on the bank or insurer that offers it. We advise you to do some real research and comparison work, or to talk to a tax expert.

Buying ETFs with life insurance

As with the retirement savings plan, it is possible to invest in ETFs as part of a free management life insurance contract. Life insurance offers tax advantages, but also and above all advantageous conditions as regards transmission. It is therefore the solution to choose if you wish to build a portfolio of ETFs to pass on to your children.

The taxation on a life insurance contract is degressive according to the time of holding. Thus, it will be 30% for contracts of less than 8 years (or income tax scale + 17.2% social security levies if this is more advantageous for you) and 24.7% (7.5% tax + 17.2% social security levies) once the 8 years have passed. Again, you can choose the income tax scale + 17.2% social security levies if this is more advantageous for you.

Capital invested in a life insurance policy partially escapes inheritance tax. Thus, for payments made before the insured’s 70th birthday, the designated beneficiary will be able to receive the funds in the contract without inheritance tax up to €152,500, with a flat-rate tax of 20% above that, then 31.25% above €700,000. For payments made after the insured’s 70th birthday, the beneficiary of the contract may receive the funds of the contract without inheritance tax up to €30,500. Beyond that amount, taxation is applied according to the estate tax scale. Interest and capital gains on payments after age 70 are fully exempt.

As with the PER, the fees and conditions of life insurance contracts may differ from one banking establishment to another. Therefore, the choice of intermediary for the subscription of a life insurance contract should not be taken lightly.

Buying ETFs with a securities account

To conclude, let’s remember that the CTO (ordinary securities account) offers no tax advantages, but also imposes no constraints. It is the preferred solution for those who wish to have the freedom to invest in ETFs without having to ask themselves the question of eligibility and for those who do not want to have any constraints regarding payments or withdrawals.

Why invest in a stock market ETF: 7 good reasons

Compared to traditional mutual funds, ETFs have many advantages for retail investors.

1. Simple to use, the ETF can be integrated into a life insurance, PER, PEA or securities account

An ETF is a fund that allows you to invest with a single order on a basket of stocks. For example, by buying a CAC 40 ETF, one is positioned, with a single buy order, on all CAC 40 stocks. An ETF can be housed on the unit-linked supports of a life insurance, a PER, but also on a securities account or well on a PEA.

2. The ETF has reduced management fees compared to SICAVs and FCPs

Low cost, ETFs have low management fees (running costs or TERs), well below 1%. They are around 0.1% for ETFs that track major, highly accessible indexes (DAX, Dow Jones, etc.) and just over 0.5% for specialized trackers (ETFs on sector stocks, for example) according to Deutsche Bank. FCP and SIVAC fees, which vary widely depending on the type of fund, are around 1.4% for Eurozone equities, 1.6% for international equities and 1.7% for French equities, according to an AMF article published in March 2021 entitled Les frais des fonds et SICAV. In addition, ETFs have no front-end load. The investor must simply pay the transaction costs (buying and selling) of the tracker, which, with the offers of online brokers, are only a few euros. New brokers Bourse en ligne even offer to invest in ETFs without any fees.

3. The ETF allows you to take advantage of the very attractive returns of the stock market

Equities are the most rewarding asset class over the long term. An AMF study shows that since 1950, average annual real returns (inflation deducted) have ranged from -18.4% to +35.9% for a 3-year holding and from -3% to +13.6% for a 20-year holding.

ETFs allow investors to take full advantage of stock market performance, even more so than traditional actively managed funds that struggle to outperform their benchmark. SPIVA Scorecard research shows that the majority of funds are outperforming their benchmarks. For example, as of mid-2020, only 7% of professional fund managers manage to outperform their benchmarks over a five-year horizon in the S&P 500 Large-Cap segment. Index ETFs offer a much better chance of outperforming professional fund managers. Study after study points in the same direction. The latest Morningstar Active/Passive Barometer of March 2021 shows that, over 10 years, less than a quarter of active managers outperform their index. In other words, in the vast majority of cases, buying an ETF is more attractive to the investor than buying units of an expertly managed fund.

In addition, the low management fees of stock market ETFs very favorably impact the performance of trackers, which, as a result, often outperforms the more heavily charged actively managed funds.

4. Easier liquidity for the investor with the Bourse ETF

Because it is continuously listed, the investor can buy or sell an ETF throughout the stock market session (from 9:00 a.m. to 5:30 p.m. on the Paris Stock Exchange), whereas the traditional mutual fund can generally be traded only once or twice per session. Of course, he can also know the price of the ETF at any time. You are free to buy an ETF and sell it the next day. Remember, however, that an ETF has, like a traditional fund, a recommended investment period of at least 3 to 5 years, at the end of which it is supposed to have delivered its full performance potential in relation to risk.

5. Diversification into foreign financial markets and PEA tax benefits

All ETFs are eligible for the securities account, but you should also know that some trackers are also eligible for the PEA, PEA-PME, and can even be housed within certain PER or online life insurance. Thus, one can use trackers to position oneself on foreign indices such as those of the United States or emerging markets, while benefiting from the tax advantages of PEA, PEA PME and life insurance!

6. A broad offering of trackers and ETFs listed on Euronext

With more than 1,300 ETFs listed on Euronext, the ETF offer is wide enough for every investor to find what they are looking for. ETFs are therefore useful for investing in stocks in buoyant sectors such as new technologies or BioTechs or in ” green ” quality ” investment grade “bonds, for example.

7. Simplicity of setting up investment strategies with trackers

Exchange ETFs make it very easy to set up investment strategies to bet on dividends, volatility, leverage or falling markets. We will elaborate on some of these strategies later in the article.

ETF: investing with free management or managed management

From one’s life insurance contract, PER, PEA or securities account, it is possible to invest in ETFs with free or managed management In the case of free management, the investor chooses the ETFs he wants to hold in his portfolio and when to buy and resell these assets. In the case of managed management (or management under mandate), the investor gives a management mandate to a management company that will choose for him in which ETFs to invest and how to manage the portfolio thus constituted.

Investing in SRI with ETFs

Socially responsible investing (SRI) and ESG criteria have become almost unavoidable in the ETF space. The vast majority of ETF issuers integrate ESG (Environmental, Social, Governance) selection and risk criteria into the composition of their equity portfolios. Some issuers, more and more numerous, are even specializing in Green Bonds, renewable energy, Clean Tech, decarbonization, etc.

During 2022, we will undoubtedly see a continuation of the development of green finance and SRI observed since 2019. The Paris agreements are more than ever at the heart of many decisions at both the political and financial levels. As an example, some regulators are already thinking about a ban on Bitcoin “mining,” which is considered too energy intensive.

The transformation of the last few years towards a more responsible and sustainable finance is not only about global warming because, since the Covid-19 crisis, it is a massive awareness of investors on the importance of taking into consideration the social aspect in investment choices.

To conclude, it is no longer a matter of pretending to invest in products that are “greener” and more “socially responsible” than others, but truly demonstrating the positive impact of investment solutions advertised as responsible and fair.

While it’s necessary to sort through and choose the ETF that’s going to meet your positive impact requirements, in 2022 there’s enough choice to meet everyone’s expectations (or almost everyone’s).

How to choose an ETF to invest in

It is crucial that investors wishing to invest in ETFs on the stock market adopt robust selection criteria, adapted to their needs. Maxime Bonelli, R&D engineer at Koris, says that a tracker’s performance should be evaluated relatively to the benchmark, not just based on absolute returns or management fees. These should be related to the ” tracking difference “for example, i.e. the target tracking difference between the ETF and the benchmark.

Generally speaking, it will be remembered that an investor, when choosing an ETF, should carefully consider the following:

• the benchmark index;
• the ETF provider;
• the replication methodology;
• the fees;
• the dividend treatment;
• the “tracking difference” or ” tracking error ” ;
• the capitalization or AUM
• liquidity (and whether it is supported by a market maker or not);

ETFs: possible investment strategies with trackers

Taking advantage of leverage with the Leverage ETF

To boost your portfolio’s performance, rather than using the Deferred Settlement Service (DSS) or learning how to handle more complex derivatives like turbos or options, use leveraged trackers. An ETF can provide additional performance compared to an index, through the use of leverage. More risky than a traditional ETF, the leveraged ETF can also outperform. With a leveraged ETF of 2, your gains (if you’re right) as well as your losses (if you’re wrong), can double on a daily basis.

Taking advantage of falling stock prices with Bear or ETFs ” short “

Bear (or “short”) tracker ETFs allow you to bet on falling prices and offer the same benefits as more complex derivatives without the disadvantage of having to master “the Greeks.” The Short CAC 40 tracker follows the evolution of the CAC 40, but in the opposite direction. So if the CAC 40 loses 2%, the Bear tracker gains 2%. There are even -3x Short ETFs that replicate the inverse performance of the underlying with leverage, in which case a 1% decline will result in a 3% gain.

However, Leveraged & Short ETFs track the daily performance of the benchmark, which involves “beta slippage.” “Beta slippage,” or compounding, can cause the value of your tracker to decline regardless of changes in the underlying, due to changes in the volatility of the benchmark. It is advisable not to keep Leveraged & Short trackers in your portfolio for too long.

This type of stock market ETF therefore allows you to bet on a decline in the financial markets, but you can also use it to hedge your portfolio. For example, if you are exposed to the CAC 40 index and you anticipate a drop in the Parisian index, an inverse tracker on this index will allow you to hedge your portfolio, having moreover only one order to place (purchase of a Short CAC 40 tracker) whereas the resale of your CAC 40 shares would involve many stock market orders (and therefore potentially substantial brokerage fees). The icing on the cake: being hedged while still owning your shares, you will be able to receive any dividends from your shares.

Replicating investment strategies with Smart Beta ETFs

The ETF market remains highly concentrated (according to BlackRock, the top three providers manage about 70% of the market) with strong competition among providers on price, but also on innovation and on ETF differentiation with increasingly sophisticated products that now intelligently replicate indices: the famous “strategic beta” ETFs also known as “smart beta” or “advanced beta.”

In contrast to stock market indices designed on the basis of market capitalization (the larger a company’s capitalization, the higher its weight in the index), smart beta is based on indices constructed, for example, on the basis of the company’s valuation (value approach), by equal weighting of capitalizations (the same weight for all stocks), or even on the basis of volatility.

The objective of smart beta is to achieve superior performance and/or lower risk.

ETF PEA: our selection of the best 2022 ETFs

The PEA is a fiscally attractive envelope that allows you to invest in the stock markets, however with an important restriction  are eligible only the securities of companies whose registered office is located in the European Union (EU) or in another state that is part of the European Economic Area (EEA) and that has concluded a tax treaty with France that includes a clause of administrative assistance in order to fight against tax fraud or tax evasion or a treaty of administrative assistance in order to fight against tax fraud and tax evasion.

But some PEA-eligible trackers and ETFs allow you to get around this prohibition by positioning yourself on stock markets located outside the EU. Discover our selection of PEA trackers and ETFs for 2022.

The PEA is the only one that is eligible for tax evasion

ETF PEA Nasdaq to take advantage of the growth of the US technology sector

The U.S. Nasdaq index is among the fastest-growing global indices of the past 20 years. It is primarily composed of U.S. companies such as GAFAMs, biopharmaceutical groups, and those specializing in the new technology sector.

Warning, technology stocks have been heckled since the first 9 months of 2022. Therefore, one should be very cautious with regard to the high valuations of this segment, or even keep cash in the portfolio in anticipation of possible purchases after a period of consolidation.

Lyxor PEA Nasdaq-100 UCITS ETF – Capi

The Lyxor PEA Nasdaq-100 UCITS ETF – Capi has a +349% growth since inception, +61% over 3 years and -14% over the last 12 months (as of 10/2022). This PEA ETF is not leveraged.

Features of the Lyxor PEA Nasdaq-100 ETF

• ISIN code : FR0011871110
• Inception date : May 20, 2014
• ETF PEA eligibility: yes
• ETF (annual management fee) : 0.30%
• Distribution policy : capitalization
• Assets under management as of October 20, 2022: €114 million
• Unit value at October 20, 2022: €44.97
• Risk (1-year volatility): 29.68%

Stock market ETF objective: to track the performance of the Nasdaq-100 Net Total Return benchmark (including dividends).

Amundi PEA Nasdaq-100 UCITS ETF

The Amundi PEA Nasdaq-100 UCITS ETF – EUR shows a growth of -13% over the last 12 months (as of 10/2022). This PEA ETF is not leveraged.

ETF PEA Value Europe to focus on the European value segment

Features of the Lyxor MSCI EMU Value ETF

• ISIN code : LU1598690169
• Inception date : 1^st April 2005
• ETF PEA eligibility: yes
• ETF (annual management fee) : 0.40%
• Distribution policy : distribution
• Assets under management as of October 20, 2022: €247 million
• Unit value at October 20, 2022: €98.32
• Risk (1-year volatility): 22.31%

Objective of the Exchange ETF: to replicate the performance of the benchmark MSCI EMU Value Net Return EUR Index.

ETF PEA SRI to invest sustainably out of conviction and to generate performance

Climate and environmental issues are succeeding in convincing a growing number of investors around the world to opt for a socially responsible investment (SRI) approach  or respectful of Environmental, Social and Governance (ESG) criteria.

ETF issuers have therefore realized the importance of adding SRI and ESG compliant ETFs to their product lines.

Amundi MSCI EMU ESG LEADERS SELECT – UCITS ETF DR- EUR (C)

Amundi MSCI EMU ESG LEADERS SELECT ETF – UCITS ETF DR- EUR (C) has a 3-year growth of +2.80% and a loss of -15.5% over the last 12 months (as of 10/2022). This PEA ETF is not leveraged.

Features of the Amundi MSCI EMU ESG LEADERS SELECT ETF

• ISIN code : LU1602144575
• Inception date : February 14, 2018
• ETF PEA eligibility: yes
• ETF (annual management fee) : 0.25%
• Distribution policy : capitalization
• Assets under management as of October 20, 2022: €1,261 million
• Unit value at October 20, 2022: €218.55
• Risk (1-year volatility): 21.31%

Objective of the Stock Market ETF: to replicate the performance of the MSCI EMU ESG Leaders Select 5% Issuer Capped Index (Total Return), which includes the shares of large and mid-cap companies from 10 countries in the Eurozone with the best ratings in terms of ESG criteria (Environmental, Social, and Governance).

Lyxor MSCI EMU ESG Trend Leaders (DR) UCITS ETF – Acc

The Lyxor MSCI EMU ESG Trend Leaders (DR) UCITS ETF – Acc shows +4.08% growth since inception as of March 20, 2018 (to October 20, 2022). This PEA ETF is not leveraged.

Features of the Lyxor MSCI EMU ESG Trend Leaders ETF

• ISIN code : LU1792117340
• Inception date : March 20, 2018
• ETF PEA eligibility: yes
• ETF (annual management fee) : 0.20%
• Distribution policy : capitalization
• Assets under management as of October 20, 2022: €21 million
• Unit value as of October 20, 2022: €21.25
• Risk (1-year volatility): 22.68%

Objective of the Exchange ETF: to track the performance of the MSCI EMU Select ESG Rating and Trend Leaders Net Return EUR Index incorporating European companies that exhibit a robust ESG profile relative to their sector, as well as a positive trend in the improvement of that profile.

BNP Paribas easy low carbon 100 Europe PAB – EUR

The BNP Paribas Easy Low Carbon 100 Europe PAB ETF – EUR shows a +5.05% growth over 3 years and a -11% decline over the last 12 months (as of 10/2022). This PEA ETF is not leveraged.

Features of the BNP Paribas Easy Low Carbon 100 Europe ETF

• ISIN code : LU1377382368
• Inception date : June 2, 2017
• ETF PEA eligibility: no
• ETF (annual management fee) : 0.30%
• Distribution policy : capitalization
• Assets under management as of October 20, 2022: €659 million
• Unit value at October 20, 2022: €191.19
• Risk (1-year volatility): 18.18%

Exchange ETF objective: The ETF replicates with a maximum tracking error of 1% the performance of the Low Carbon 100 Europe PAB® Index (NTR) by investing in equities issued by companies composing this index composed of European companies selected on the basis of a minimum environmental, social and corporate governance (ESG) rating (environmental opportunities, pollution and waste, human capital, corporate governance, etc.) and on the basis of their efforts to reduce their exposure to coal and unconventional fossil fuels, with a cap that limits a company’s maximum weighting within the index to 5%.

ETF PEA CAC 40 to replicate the benchmark index of French companies on the stock market

Since its March 2020 low near 4,000 points, the CAC 40 index has rallied sharply by more than 3,000 points (value above 7,300 points at the beginning of 2022), up +75% in 22 months. Over the course of 2022, the CAC 40 suffered a 20% decline with a low of 5,650 points (down over 1,600 points in less than 10 months). Although above the March 2020 level, the CAC 40 has experienced a strong downward trend since the announcement of the war in Ukraine.

Investors looking to invest in France’s largest companies may therefore be interested in CAC 40 ETFs.

Let’s also note that the large French groups that make up the CAC 40 index often have a strong international presence.

XTrackers CAC 40 UCITS ETF

The XTrackers CAC 40 UCITS ETF enjoys +15% growth over the past 3 years and a -6.74% decline over the past 12 months (as of 10/2022). This PEA ETF is not leveraged.

Features of the XTrackers CAC 40 ETF

• ISIN code : LU0322250985
• Inception date : July 9, 2008
• ETF PEA eligibility: yes
• ETF (annual management fee) : 0.20%
• Distribution policy : distribution
• Assets under management as of October 20, 2022: €135 million
• Unit value at October 20, 2022: €61.86
• Risk (1-year volatility): 22.27%
• Stream ETF objective: The ETF replicates the French CAC 40 index.

Amundi CAC 40 UCITS ETF DR – EUR (C)

The Amundi CAC 40 UCITS ETF DR – EUR (C) has a +13% growth over the past 3 years and a -8% decline over the past 12 months (as of 10/2022). This PEA ETF is not leveraged.

Features of the Amundi CAC 40 ETF

• ISIN code : LU1681046931
• Inception date : February 14, 2018
• ETF PEA eligibility: yes
• ETF (annual management fee) : 0.25%
• Distribution policy : capitalization
• Assets under management as of October 20, 2022: €670 million
• Unit value at October 20, 2022: €94.16
• Risk (1-year volatility): 22.52%
• Stock market ETF objective: The ETF replicates the French CAC 40 index.

Some questions about ETFs?

What is an ETF?

An ETF or tracker is an index fund, which replicates the performance of an index, with passive management. ETFs or trackers allow you to invest in the stock market but also to invest in the bond market or the commodities market.

Why invest in an ETF in the stock market?

An ETF is a way to benefit from the performance of the stock market over the long term, with a relatively modest entry ticket, benefiting from reduced fees and respecting the essential principles of diversification.

Which PEA ETFs to buy?

The PEA-eligible ETFs allow you to invest in the stock markets of the European Union but also the rest of the world. In particular, it will be wise to use PEA ETFs to take advantage of the tax benefits of the PEA while positioning yourself on the world’s largest stock markets.

How to invest in ETFs?

It is possible to select an ETF among the unit-linked supports of one’s life insurance or PER. It is also possible to invest in a tracker or ETF through a PEA or a securities account.

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