Low-cost mutual funds in France?

[elysianfields]

Hello Mustachians,

I recently visited my mother-in-law, who retired in the South of France (we all should have it so tough, I know!) who was complaining that her savings were only earning 2.5%.  I know that one should count one's blessings in this low interest rate environment.

Nevertheless, I suggested she look into low-cost index funds and did some research myself.  Vanguard has options for French residents (my MIL is also a French citizen), but the minimum investment in most is very high (many starting at 100,000 €!).  Blackrock and many others have high front loads (5%) and ongoing expenses (1-2%).  Europeans tend to invest through life insurance policies, which are also high-cost; furthermore, my MIL has no need for one.

Does anyone know of any good low-cost index funds available to French citizens?

Thanks in advance.

[DrMinimal]

Also interested.

[WerKater]

I can't comment on France, specifically, but for Germany this website gives a pretty good overview over index funds (note that, as far as I know, almost all index funds in europe are ETFs)
https://www.justetf.com/en/index.html
It also has the option to declare yourself as French, so I suppose it should work for France as well.

You might not find anything that is as good as Vanguard in the US, but you should find many options that are much much better than "regular" (i.e., freakishly expensive) funds.

[Rosbif]

Vanguard is 100k min if you buy through ireland, I think. I Was told 500K... Institutional only, effectively. And it's NOT owned in the same way as in the US.

Most funds are held in life insurance policies as they're tax-efficient and better for inheritance stuff (there's no testamentary freedom in France).

You can hold US vanguard ETFs but you pay withholding taxes and you'd need to think about currency hedges.

If you need euro stuff, take a look at boursorama, the website is pretty good for searching through products (no connection). There are lots of complex tax issues which can make a massive difference as France is quite high tax, so you may indeed be better of with professional advice!

[DrMinimal]

From what I found, the less tax-disadvantaged approach is to buy stocks through a "PEA", a blocked plan limited to 150,000€ in deposit, which is "almost" tax free (why do it simple?): no income tax, but 15.5% of social charges. You can buy only Europe-related stocks, so no VTSMX.

You can't withdraw money before the first 5 years without losing the tax advantages, and if you withdraw money after that you can't buy shares on your PEA anymore (I really don't understand this last rule. To my ears it is as good as "don't withdraw an amount that is not prime on a full-moon night without wearing a hat").

150,000€ leaves plenty of room to invest, but if you want to be able to sell or buy non-european shares you would have to go for a "Compte titre", which has a classical tax scheme: 15.5% of social charges on your gains, then you subtract 40% of your gains and apply your "tax slice" on this amount.
So if you are in the 30% tax "slice", you would pay an additional 18% = 30% of 60% of your gains, with the social charges the total would be 33.5% of your gains.

If you are in the 45% slice, your would pay a total of 42.5% of your gains.

Boursorama seems to be a good platform for a "PEA" or a "Compte titre", but right now I wouldn't be able to pick a good fund for a totally passive strategy in the MrMoneyMustache way (which was the original question, I diverged).

I would love to have feedback from French passive investors on this forum.

[k9]

Here are the index funds I currently own, here in France. None of them is concerned by a required minimum (100K or lower).

- VEUR : from Vanguard, FTSE Europe large caps, 0.12% expense ratio. Fits in a PEA.
- DJSC : from iShares, Dow Jones small caps Europe, 0.40% expense ratio. Fits in a PEA.
- ACWE : from SPDR, all country world index, 0.40% expense ratio. Does *not* fit in a PEA since most stocks aren't from Europe.
- AEEM : from Amundi, MSCI emerging markets, 0.20% expense ratio. Fits in a PEA, but this is not a physical replication of the index : it relies on a swap.

There are other options, but these are the best IMHO. Others are either too expensive, rely on a swap (AEEM does, but it is difficult to be invested in EM without them), don't fit in the tax efficient PEA even when they should (which is very suspicious) or would mean having too much concentrated with one seller.

If I had to own only one, that would be either VEUR (hey, it's the beloved Vanguard and it fits in PEA but it's limited to Europe) or ACWE (worldwide but less tax efficient).

You can't withdraw money before the first 5 years without losing the tax advantages, and if you withdraw money after that you can't buy shares on your PEA anymore (I really don't understand this last rule. To my ears it is as good as "don't withdraw an amount that is not prime on a full-moon night without wearing a hat").

That's because the PEA is conceived as an enveloppe where you invest for a long period, then withdraw once you have achieved your investing goal (whether that's buying a new house, a new house, or retiring). It is not conceived for buying shares, selling some of them, buying some more, etc.

But if you hold on the long term, the "compte-titres" is not as awful as many think : anything you hold longer than 2 years or, even better, 8 years, is taxed much less than if you sell earlier.

[DrMinimal]

Very interesting k9.

Did you see this Vanguard tracker: VNRT?
http://www.boursorama.com/bourse/trackers/etf.phtml?symbole=1rAVNRT

It is a North-american index tracker, 0.10% expense ratio, but weirdly enough it fits in a PEA.

I am going to open a PEA and a compte-titres at Boursorama in the next few weeks.
I am considering VEUR & VNRT for the PEA, and aim a US / Global based compte titre, maybe 80% / 20%

[k9]

Did you see this Vanguard tracker: VNRT?
http://www.boursorama.com/bourse/trackers/etf.phtml?symbole=1rAVNRT

It is a North-american index tracker, 0.10% expense ratio, but weirdly enough it fits in a PEA.

You're right, and it is not a synthetic tracker, but a "physical" one, which is strange.
I think it's a mistake from Boursorama. I'll try to buy some of it and put it in my PEA, but be ready to have to sell it if they discover something is wrong.

[DrMinimal]

Let me know if you were able to buy some of it!

[DrMinimal]

These two trackers emitted by Vanguard are eligible do a PEA too:
http://www.zonebourse.com/VANGUARD-FTSE-DEVELOPED-W-18248335/
http://www.zonebourse.com/VANGUARD-FTSE-DEVELOPED-E-18248334/

[GoldenNeko]

Did you see this Vanguard tracker: VNRT?
http://www.boursorama.com/bourse/trackers/etf.phtml?symbole=1rAVNRT

It is a North-american index tracker, 0.10% expense ratio, but weirdly enough it fits in a PEA.

You're right, and it is not a synthetic tracker, but a "physical" one, which is strange.
I think it's a mistake from Boursorama. I'll try to buy some of it and put it in my PEA, but be ready to have to sell it if they discover something is wrong.

Not a mistake. I own some of VNRT in my own PEA. The trick is that it's not the American Vanguard, but the Irish one. So the sellings/buy are made in Europe (bizarre, but seems to work). VNRT tracks the 100th biggest north American companies.

I would also recommend VEUR, for some European shares.

[DrMinimal]

Thanks for your feedback!
I started throwing some money in VEUR shares. What else would you recommend in a PEA?

[GoldenNeko]

If you speak French, smartportfolio can give you some feedback/ideas for funds eligible for PEA: http://www.smartportfolio.org/
For instance, here is what I get for an aggressive portfolio.

All of these can be inside a PEA, except last line which is a life insurance contract, based on bonds.
Don't forget to check each fund DICI and adapt to your asset allocation plan.
I personally don't own most of these, sticking with Vanguard at the moment.

[Concojones]

You can't withdraw money [from a PEA] before the first 5-8 years without losing the tax advantages, and if you withdraw money after that you can't buy shares on your PEA anymore.

I have to correct all you Frenchies ;)
From what I'm reading online, you can continue to buy/sell shares inside your PEA forever. However, once you take cash out of your PEA, you can't put it back in. For instance, Le Revenu writes:

Au terme des huit ans [...] il est possible d’effectuer des retraits réguliers [...]. Parallèlement, vous pouvez continuer à gérer activement le PEA [...]. Il est bien sûr possible de réaliser tous les arbitrages nécessaires, selon la conjoncture, en réglant le curseur à tous les niveaux entre «100% trésorerie» et «100% actions».