The Euro Real Estate Fund. In recent years, investment in the real estate market has seen an improvement in performance. This is why betting on a euro real estate fund becomes a more interesting option than investing in the traditional formula of support in classic euro in terms of life insurance contracts.
Support in Euro
In euro funds, the capital paid into a life insurance contract is managed prudently. In other words, it is not injected into the financial market which is often the victim of frequent fluctuations. In principle, the sum is invested in the general assets of the company. There are generally three types of euro media:
The Classic Formula: In this case, the majority of payments (around 80% to 90%) are placed in bonds or in government loans such as Treasury bills. The rest are engaged in the real estate market or as a shareholder. Thus, the rate of return may vary depending on the key rate applied by the authorities.
The Euro Real Estate Fund: In this alternative, most of the money is mobilized in the real estate sector. In practice, savings are mainly managed by Real Estate Placement Companies (SCPI) or Collective Real Estate Placement Organizations (OPCI).
“Dynamic” euro support: It is also an option derived from the first. Indeed, most of the payments are still injected into the bond market. However, to benefit from a valued return, the 20% or 30% of the investments are placed in shares in the Undertakings for Collective Investments in Transferable Value or UCITS (eg: SICAV and FCP)
In all cases, the rate of return of the contract in euro funds is set by the insurer at the start of the year. It must be determined according to the products made by the company during the fiscal year. In this type of investment medium, the subscriber benefits from a profit sharing called TMG or minimum guarantee rate. This is the minimum return that the company undertakes to pay the saver.
The Advantages of Euro Real Estate Funds
A Secure Placement
With this investment support, the capital is introduced into the active account of the company. Its profitability is therefore guaranteed by it. In theory, the risks are borne by the insurer. It is therefore a better alternative to invest reasonably in the real estate sector. Moreover, thanks to the TMG, the subscriber never loses out of the operation, since he invests without being exposed to the risks of the financial market. However, according to the Insurance Code, this rate cannot exceed 85% of the average of the yield ratios of the last two balance sheets. The only situation which can call into question the security of its savings is therefore the financial vulnerability of the company leading to the sale at a loss of the portfolio.
The Ratchet Effect
According to this concept, the annual products drawn are definitively acquired by the subscriber. In other words, the profits of the past year are no longer recoverable by the insurer. This implies that the capital invested in euro real estate funds cannot be revised downwards.
The sums committed to this investment support remain accessible to the subscriber at any time.
Advice from the Broker
Even if the real estate market is on the rise today, it should be noted that the profitability of euro real estate funds is not necessarily going in the same direction. Indeed, its performance may vary depending on the expertise of the insurer’s partner. So, if the manager chosen by it is not sufficiently experienced, the rate of return on the investment will be less attractive.
To optimize your gain, you have to be careful in selecting reliable market players. In this process, the help of an expert credit advisor may be essential. In addition, in the event of failure of the real estate market, it is better to transfer part of the capital to other investment vehicles.