Investing in the stock market may seem complicated, but certain tools can simplify access to the financial markets. Among these, ETFs (or trackers) stand out for their accessibility, diversification, and generally low fees. Whether you’re a beginner or a more experienced investor, understanding how they work is essential for building a well-rounded portfolio tailored to your goals.
What is an ETF?
An ETF, or Exchange-Traded Fund, is a fund listed on a stock exchange that tracks the performance of variousfinancial indices.¹ These funds are also called “trackers” because they seek to track the performance of a benchmark index, such as the CAC 40, S&P 500, MSCI World, Euro Stoxx 50, or a bond, sector, or thematic index.
According to the AMF, an ETF allows investors to invest in stocks or bonds in a single transaction, while tracking the performance of an index—whether it rises or falls. It can therefore be used to diversify a portfolio without having to purchase each security directly.
In practical terms, investing in a CAC 40 ETF means gaining exposure to the performance of the major French stocks in the index (such as LVMH, TotalEnergies, Sanofi, etc.). An MSCI World ETF (a global benchmark index), on the other hand, provides exposure to thousands of international stocks weighted by market capitalization. Other ETFs target specific sectors, such as healthcare, technology, and energy, as well as bonds or innovative themes like Bitcoin or the energy transition.
How does an ETF work?
An ETF tracks an underlying asset, most often an index. This tracking can be physical or synthetic, depending on the management approach adopted by the issuer.
In a physical replication, the fund directly purchases the stocks that make up the index, generally in proportion to their weightings within the index. In a synthetic replication, the fund uses a financial contract (swap) to replicate the index’s performance.
In both cases, the objective remains the same: to track the underlying asset’s performance as closely as possible over the long term.
ETFs are continuously traded. They can therefore be bought or sold on the stock exchange just like a stock, which makes it easy to include them in an investment portfolio.
Why Invest in ETFs?
ETFs appeal to many stock market investors for three main reasons: simplicity, diversification, and low fees.
- First advantage: accessibility. With a single ETF, you can gain exposure to several hundred—or even thousands—of stocks, allowing you to quickly build a diversified portfolio with a low minimum investment.
- Second advantage: fees. ETFs offered by providers such as Amundi or Lyxor often have lower management fees (TER) than traditional funds, thanks to their passive management.
- Third advantage: transparency. Investors know exactly which index the fund tracks, how it is weighted, and the fund’s composition.
ETFs can thus complement a wealth diversification strategy, alongside other investments such as real estate or bonds, while also being incorporated into investment vehicles such as life insurance policies through unit-linked plans.
What are the risks associated with ETFs?
The main risk is market risk. If the underlying index falls, the ETF’s value will also fall. The AMF notes that investors may lose all or part of their principal, particularly with leveraged ETFs—which amplify market movements—or ETFs exposed to volatile assets such as Bitcoin or certain innovative themes.
There is also a currency risk when the ETF is exposed to assets denominated in a foreign currency. For example, an ETF invested in U.S. stocks may fluctuate based not only on corporate performance but also on the euro/dollar exchange rate.
Another point to watch: liquidity risk. Some ETFs may be more difficult to buy or sell quickly without affecting their price, particularly when trading volumes are low or the underlying assets themselves are illiquid. Under certain market conditions, this can result in higher purchase costs or losses upon resale.
Finally, some ETFs are more complex: leveraged ETFs, inverse ETFs, highly concentrated sector ETFs, or thematic ETFs. They can be useful in certain strategies, but they require a solid understanding of market mechanisms.
How do you choose the right ETF?
Before investing, it's a good idea to ask yourself a few questions.
Which index does the ETF track?
This is the first criterion. An S&P 500 ETF, a CAC 40 ETF, an MSCI World ETF, and a bond ETF do not all have the same objective. The choice therefore depends on your investment horizon, your risk profile, and the weighting you wish to assign to each geographic region or asset class based on your portfolio management strategy.
What are the fees?
Ongoing expenses, also known as the TER (an acronym for Total Expense Ratio), reduce the fund’s annual return. It is important to factor in the costs associated with buying and selling, as well as the investment vehicle used: securities account, PEA, PER, or life insurance.
Management fees vary depending on the ETF and the issuer (Amundi, Lyxor, etc.). They should therefore be analyzed over the long term.
Is the ETF a reinvesting or a distributing fund?
A dividend-reinvesting ETF automatically reinvests dividends. It is suitable for a long-term investment strategy. A dividend-paying ETF pays out income to the investor, which may be appropriate for those seeking a steady stream of income.
How large is the fund?
The size of an ETF corresponds to its assets under management, that is, the total amount invested by investors in the fund. An ETF with a large market capitalization is generally more liquid, attracts more investor interest, and is easier to buy or sell on the financial markets.
While this does not guarantee its performance, a large fund may offer better trading conditions and help mitigate certain risks, particularly those related to low trading volume.
Is the stand suitable for your budget?
Not all ETFs are available in all investment vehicles. Some can be held in a securities account or a PER (retirement savings plan), while others can be held in a PEA (stock savings plan) or a unit-linked life insurance policy, which allows you to optimize your portfolio’s tax efficiency. Eligibility should be verified in the product documentation.
Which ETFs should you invest in in 2026?
In 2026, against a backdrop of volatile financial markets, geopolitical uncertainties, and shifts in interest rates, ETFs remain essential tools for building a diversified and adaptable portfolio. The goal here is not to recommend a specific product, but rather to highlight several major categories of ETFs that investors regularly use to structure their asset allocation.
Global ETFs: The Foundation of a Diversified Portfolio
ETFs that track global indices, such as the MSCI World—which are the most widely used by investors—often form the foundation of a portfolio. They provide exposure to several hundred, or even thousands, of international stocks, weighted according to their market capitalization and economic influence. The goal is to capture long-term global market growth through broad geographic diversification.
U.S. ETFs: A Driver of Performance
ETFs that track the S&P 500 allow investors to invest in the largest U.S. companies, which are often global leaders in their sectors (technology, healthcare, finance, etc.). These trackers are widely held in investment portfolios, as the United States remains a major driver of economic growth.
European ETFs: Local Exposure
CAC 40 or Euro Stoxx 50 ETFs provide exposure to European markets, featuring well-established companies in sectors such as luxury goods, energy, and manufacturing. They can be particularly attractive as part of a diversification strategy or within a PEA (especially a PEA focused on European stocks), when offered in UCITS-compliant versions by issuers such as Amundi or Lyxor.
Bond ETFs: Stabilizing Your Portfolio
In an environment of falling interest rates (rate easing), bond ETFs are regaining popularity because the value of bonds tends to rise. Bond ETFs allow investors to invest in government or corporate bonds with a lower level of risk than stocks.
Sector and Thematic ETFs: Capitalizing on Trends
Sector ETFs (technology, healthcare, energy, etc.) and thematic ETFs (artificial intelligence, energy transition, cybersecurity, Bitcoin) allow investors to target specific current trends.
For example:
- Technology and AI: Strong Growth, but High Volatility
- Energy and defense: sectors bolstered by the geopolitical landscape
- Commodities ( gold): safe-haven assets in times of uncertainty
Dividend ETFs: Generating Income
Some ETFs are designed to select companies that pay regular dividends. They may be suitable for investors seeking supplemental income, particularly as part of their retirement planning.
Alternative ETFs: Advanced Diversification
Finally, some ETFs provide access to more specific asset classes:
- Commodity ETFs (gold, silver, oil, etc.);
- Listed real estate ETFs;
- ETFs linked to crypto-assets such as Bitcoin (through indirect products in Europe).
They allow you to take asset diversification a step further, but require a solid understanding of the risks involved.
Euronext currently lists several hundred ETFs, which illustrates the depth and breadth of the offerings available to European investors.
ETFs, Life Insurance, and Asset Diversification
ETFs can be held in several types of accounts: securities accounts, PEA accounts, PER accounts, or life insurance policies. The choice depends on tax considerations, your investment horizon, and the level of flexibility you seek, as well as how you wish to structure your portfolio over the long term.
In a life insurance policy, ETFs are accessible through unit-linked investments. These investments do not guarantee the principal, but they allow you to diversify your savings beyond euro-denominated funds, notably by gaining exposure to the stock or bond markets. Rebalancing also allows you to adjust your portfolio management over time based on economic conditions, your goals, and your risk profile.
Tax advantages in the medium and long term
One of the main advantages of life insurance is its tax treatment. In addition, it’s important to note that the earnings generated are not taxed as long as no withdrawals are made.
In the event of a surrender (withdrawal), the tax treatment depends on how long the policy has been held:
- Before age 8: taxation under the single flat-rate withholding tax (PFU of 31.4%, of which 18.6% is forsocial security contributions³) or under the income tax schedule;
- After 8 years: reduced tax rates, with an annual tax exemption on gains (€4,600 for a single person, €9,200 for a couple) and a reduced tax rate of 7.5% (plus social security contributions).
An effective tool for passing on one's estate
Life insurance also offers advantages when it comes to asset transfer. The funds transferred to beneficiaries may be subject to special tax treatment, distinct from traditional estate taxes:
- Before age 70: up to €152,500 per beneficiary tax-free (above that amount: 20% up to €700,000, then 31.25%);
- After age 70: a general exemption of €30,500. Beyond that amount, the premiums paid are subject to standard inheritance tax. However, gains (interest and capital gains) remain tax-exempt.
This makes it a useful tool for planning the transfer of a diversified portfolio, including ETFs.
A flexible budget for managing your investments
Through portfolio rebalancing, you can adjust the allocation of your savings across different investment vehicles (ETFs, euro-denominated funds, other unit-linked products) without incurring immediate taxes. This allows you to adapt your investment strategy in response to economic cycles, market opportunities, or changes in your personal circumstances.
Raizers, as an investment and savings platform, offers solutions accessible through a life insurance policy, among other options. This approach makes it possible to incorporate various investment vehicles—including ETFs—into a comprehensive, flexible, and tax-optimized wealth management strategy.
The Differences Between an ETF and a Private Investment
ETFs are listed, liquid products available on financial markets. They therefore differ significantly from private investments or real estate club deals.
In a club deal, the investor participates in a targeted transaction—often through a dedicated entity such as a simplified joint-stock company (SAS)—with a shareholders’ agreement, a defined minimum investment, and an underlying real estate asset. Performance then depends on the success of the transaction, project management, the real estate market, and the strategy of the club deal manager.
In contrast, an ETF tracks a listed index. It offers greater liquidity but remains subject to fluctuations in the financial markets.
The two approaches can therefore serve different objectives: liquidity and broad diversification for ETFs; targeted exposure, yield seeking, and potential for real estate capital appreciation for certain private investments.
Investing in ETFs can be an effective way to diversify your portfolio, gain access to a wide range of markets, and keep costs under control. However, these products remain exposed to market fluctuations and must be selected carefully.
To take things a step further, Raizers provides advice and guides investors in building a diversified wealth management strategy, particularly through life insurance solutions. It’s a way to combine education, diversification, and the selection of investment vehicles tailored to your goals.
2. https://www.amundietf.fr/pdfDocuments/fundamentals_fr_article-5_les-avantages-des-etf-ucits-2.pdf