ETF: the simple guide to finally understanding these successful investments

Exchange Traded Funds, also called ETFs, are simple and inexpensive investment solutions. An ideal tool to get started on the stock market and begin a savings strategy.

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This is the democratization of savings. In recent years, ETFs (Exchange-Traded Funds), also called FNBs (in French Stock Exchange Traded Funds), have carved out a prominent place for themselves in the global financial landscape. In France, the Financial Markets Authority (AMF) noted a 4-fold increase in the number of French individual investors having carried out at least one ETF transaction between the second quarter of 2019 and the second quarter of 2024. This financial product is appealing everywhere. an increasingly young and diverse audience. In just five years, the average age of French investors in listed funds has fallen from just over 60 to 41, according to the Financial Markets Authority (AMF).

But what are we talking about? An ETF is a financial product that tracks the performance of an index (the CAC 40, the S&P 500, etc.) or an asset (the price of gold, for example, or Bitcoin). Buying a share of an ETF therefore means investing in a diversified set of companies and sectors (tech, energy, pharmaceutical industry, etc.) in a single operation, thus offering valuable readability for novices, who can know exactly at what price their order is executed.

An accessible and inexpensive product

This simple and transparent mechanism makes it an ideal tool for 20-35 year olds who are new to the stock market. The pandemic has also played a key role in the rise of ETFs among young audiences. Confined to their homes, many have had time to explore investment options. In addition to its simplicity, the other main advantage of ETFs for this public attentive to optimizing their savings is their low cost. With just a few euros, it is in fact possible to acquire shares in an ETF and start building up diversified savings, with the possibility of investing in all sectors (real estate, gold, bitcoin, etc.). ETFs are also distinguished by their low management fees, which partly explains the late start of these products in a country like France, where distributors (banks, insurance companies, etc.) are encouraged to inform their clients about ETF products. savings whose management fees are the highest.

First-time investors have therefore turned to other distribution channels, thanks to the emergence of online platforms and robo-advisors, participating in the democratization of access to ETFs. According to BlackRock, 44% of European ETF investors use online platforms, compared to only 21% who consult bank advisors.

Strong growth potential

In Europe, equity ETFs dominate the market, with 71% of assets under management, but other segments are gaining popularity. ESG (Environmental, Social and Governance) ETFs are experiencing strong growth, reflecting young people’s interest in investments aligned with their environmental and social concerns. In 2024, flows into ESG ETFs represented 12% of total flows, compared to 9.4% the previous year.

According to a recent study by asset manager BlackRock, 8% of French investors declared this year that they held one of these financial products, index funds also known as “trackers”. This is three times less than for cryptocurrencies, for example, which today appear in the portfolio of 23% of respondents.