ETF market trends highlight low-cost global funds and synthetic tax optimization

The ETF market features diverse investment strategies, ranging from low-cost global indices to complex synthetic structures designed for tax optimization. The BNP Paribas Easy MSCI World ex USA UCITS ETF (EEAP) aims to replicate the MSCI World ex USA Index with a total expense ratio (TER) of 0.01% per year. This passively managed fund uses physical replication and reinvests dividends.

In France, synthetic ETFs have become a subject of debate due to their use within the Plan d'Épargne en Actions (PEA). These funds allow investors to gain exposure to non-European indices, such as the S&P 500, Nasdaq-100, or MSCI World, while maintaining the tax advantages of the PEA. This is achieved through a ‘total return swap’, where the fund holds a basket of eligible European equities and exchanges their performance for the performance of a foreign index. While this mechanism keeps the funds legally eligible for the PEA, it challenges the original intent of the account, which was designed to direct French savings toward European companies.