In a context of turbulent markets and rates expected to normalize, savers are seeking to secure their units of account (UC) without sacrificing performance. The most modern life insurance contracts now offer real tools to achieve this: wide access to ETFs, opening to unlisted external funds and mechanisms for bonusing the fund in euros.
“The right strategy consists of articulating three building blocks: a base of funds in euros boosted by a sufficient rate of units of account, a pocket of diversified ETFs to capture the performance of listed markets at reduced costs, and a pocket of unlisted assets to seek additional yieldexplains Benjamin Prod’homme, managing partner at Cézembre Capital. This combination makes it possible to secure capital while boosting the overall performance of the contract over time”.
ETFs to manage risk and costs
THE ETFs allow you to expose your contract to major asset classes (shares, bonds, factors) at reduced costs, while maintaining a clear and controllable allocation. “With management fees often ten times lower than those of active funds and performances which, in the long term, outperform the majority of traditional managers, ETFs have become an essential tool for building an efficient portfolio”recalls Benjamin Prod’homme.
Concretely, favor large, liquid and physically replicated ETFs, and modulate the pockets (shares/bonds) according to your risk tolerance and your horizon.
Diversify with unlisted external funds
To smooth out market jolts, contracts offering a open architecture towards private equity, private debt or infrastructure add return drivers less linked to listed equities. “These contracts allow the saver to capture sources of return uncorrelated from the listed markets. These asset classes are today an essential lever for diversification and wealth resilience, particularly in an uncertain geopolitical environment”insists Benjamin Prod’homme. Select those eligible for life insurance, spread over time, accepting lower liquidity.
Boost the euro fund thanks to UC?
The share of CPU is not only used to seek performance: it can also increase the yield guaranteed by the contract. “Many savers are unaware that the share of units of account in their contract does not only improve overall performance, it also directly boosts the return of the fund in euros”notes Benjamin Prod’homme.
“Some insurers apply an additional yield bonus system that can double the remuneration of the fund in euros to up to 5% net depending on the unit of account rate.” Aim for the CPU threshold that triggers the best bonuswhile remaining consistent with your risk profile.
The winning combination over time
Ultimately, the most robust approach combines security and performance dynamics.
Remember to check:
- the costs (management, ETF, arbitrage, unlisted funds),
- THE bonus conditions of the fund in euros specific to your contract,
- don’t forget to diversify over time by scheduled payments and by rebalancing periodically to smooth the risk.
