What financial instruments are there in France - OPCVM, SICAV, FCP, structured products

Well, friends, it’s time to figure out what financial instruments exist in France, besides classic stocks and bonds. I often meet Russian-speaking people living in France who believe that the Russian financial market is more developed than the French one. Of course, this is not so, I say with complete confidence, because I invest in both Russia and France.

OPCVM - organisme de placement collectif en valeurs mobilières

Organizations of collective investments in financial instruments (stocks and bonds). They allow you to reduce investors' risks due to wide diversification and high liquidity. In addition, capital is managed by financial market professionals. OPCVMs can be of two types:

SICAV - société d'investissment à capital variable

These are joint stock companies whose initial capital is limited to a lower capital limit of 8 million euros. They guarantee absolute liquidity of the investment, which means that the investor can be sure that he will be able to sell his shares in the company at any time. Papers may specialize in:

• money markets,
• bonds,
• promotions,
• economic sectors,
• countries, etc.

FCP - fonds commun de placement

These are analogues of mutual funds. They are similar in principle to SICAVs, but investors do not own shares of the company, but shares. They have a lower initial capital threshold, it is 400 thousand euros - the minimum.

Cost of SICAV and FCP

The capitalization of the funds, the value and number of SICAV shares and FCP shares are announced daily, in rare cases weekly in the media.

Structured Products

These instruments are also called structured notes - they are something between a deposit and classic investment instruments. They are based on the underlying asset: stock, index, oil, currency, credit products, cryptocurrencies, etc.

They offer 3 formulas that are based on different scenarios for the future return of the underlying asset. Formulas may include guaranteed payment of all or part of the invested capital:

• 100% capital protection - guarantees the return of all investments, despite market movements. In this case, the investor can earn more than the deposit offers.
• Without capital protection, there is no guarantee of return of capital if a negative scenario materializes. This option is suitable for those who are not afraid to take risks.
• Partial capital protection - part of the capital is guaranteed to the investor if a negative scenario occurs. In this case, the investor has the possibility of higher returns than when choosing 100% capital protection.

However, even when choosing a formula with a guarantee, if the investor decides to sell the securities before the agreed date, he loses his guarantee of a return on his investment.

Dividends

OPCVM dividends can be distributed in three ways:

• Capitalization is when securities increase in value and the resulting dividend yield is reinvested in OPCVM. In this case, the investor receives income if they are sold, so until this moment he has no obligation to declare taxes.

• Payment of dividends and/or coupons. The investor is paid an annual or quarterly income. In this case, the investor has an obligation to declare it.
• A mixed allocation often occurs when a fund consists of stocks and bonds. In this case, dividends are reinvested and coupons are paid to the investor.