Should we ride the ETF wave? For now, there are still few French people who have responded to the call. According to the annual study conducted by asset manager BlackRock (People & Money), 5% of individuals now hold ETFs in their financial portfolio. But their progression is significant: +91% since 2022 (date of the first year of this barometer). What attracted them? In part, the promise of performance. 29% of ETF investors cite “the potential for higher returns than savings accounts or other investments” as motivation, given the level of costs, for example.
In a context of falling returns for many savings products, we can understand why the argument hits the mark. This is the case for general public and tax-exempt savings accounts – Livret A, Livret d’épargne populaire (LEP), Livret de développement durable et solidaire (LDDS) – whose remuneration in fact fell further on August 1. Other investments, such as ordinary savings accounts, term accounts, housing savings plans (PEL), stock savings plans (PEA) or life insurance, could suffer an increase in the general social contribution (CSG), which would increase their taxation, with a lower return as a result.
A less efficient Livret A, but infinitely less risky
Reasons enough to give in to the siren song? Looking at the yields alone, there is no a priori not a match, since it is not difficult to beat the 1.7% return offered by the Livret A. The most popular ETFs on the securities account of the Trade Republic application, for example, display much higher performances: +5.87% for the iShares Core S&P 500 – which follows the 500 largest American companies -, +8.52% for the iShares Core MSCI World – which replicates the 1,400 largest companies in the world – or even +41% for Physical Gold ETC, correlated with the price of gold.
However, it is impossible to stop the comparison here, because investing in ETFs represents a much greater risk. “Trackers” replicating major stock market indices – such as the S&P 500 or the MSCI World – are for example rated 4 or 5 out of 7 on the risk scale, with the possibility of losing all or part of your capital. While Livret A does not expose you to any risk: it is a savings book with guaranteed capital. In other words, you are always guaranteed to find at least the money deposited there.
Certain categories of ETFs are less risky
To reduce risk-taking, it has also recently been possible to favor ETFs invested in government or large corporate bonds, with a lower risk (3/7), and a fixed rate for several years which can be around 4% gross, or 2.8% net of tax once the flat tax (30%) is deducted. Taxation from which the Livret A does not suffer!
Finally, in terms of liquidity, that is to say the possibility of recovering your savings whenever you want, the advantage also comes in favor of the Livret A, with which you can repatriate your savings to your current account by simple bank transfer. With an ETF invested in the financial markets, you will have to comply with the opening hours of the stock exchanges – which are a little more restrictive. And with the risk, if you withdraw your balls at an unfavorable time, of getting back less than what you had bet.
In reality, it is therefore impossible to substitute ETFs for a Livret A. These two investments are rather complementary: once your precautionary savings – between three and six months’ salary – have been sheltered in a Livret A, you will be able to benefit from the many advantages of ETFs. In particular the diversification they offer, by allowing you to invest in a basket of several assets in a single payment. The main reason why ETF holders love them.
