Assurance-Vie Euro Funds: Record Inflows Meet Skepticism in 2026

French savers poured €192.1 billion into assurance-vie (life insurance) contracts in 2025, with net collections hitting €50.6 billion, a 77% jump from the previous year. The last time the market saw this level of activity was 2010, before sovereign debt crises reshaped the sector. At first glance, the message seems clear: the fonds en euros (euro-denominated funds) is back.

But beneath the headlines, a fierce debate rages. Are these record inflows justified by solid fundamentals, or are French investors walking into a classic trap, chasing yesterday’s safe haven while ignoring better alternatives?

The Numbers Behind the “Comeback”

The average return on euro funds reached 2.65% net of management fees in 2025, up from 2.60% in 2024 and a low of 1.30% in 2021. That marks a more than doubling in four years. With inflation running at just 0.9% in 2025, the real return sits around 1.75%, the first genuinely positive real return in years.

Paul Esmein, director general of France Assureurs, calls it a return to form. Cyrille Chartier-Kastler, founder of independent research site Good Value for Money, projects the average could hit 2.90% in 2026 and 3.20% in 2027. The driver? Rising bond yields. The 10-year OAT (Obligation Assimilable du Trésor, France’s benchmark government bond) now yields between 3.8% and 4.2%, giving insurers room to offer better rates while maintaining their margins.

Yet critics point out a simple truth: 2.65% gross is not 2.65% net for the saver. After social contributions of 17.2% and income tax (either flat tax PFU at 30% or progressive rates), the take-home return drops significantly. For contracts under eight years old, the fiscal bite is particularly sharp.

The Skeptic’s Case: “A Mediocre Product for 90% of Savers”

Many financial independence advocates argue that assurance-vie makes little sense for most people. The core complaint: fees erode the advantage. Entry fees average 0.75% according to the Opef (Observatoire des produits d’épargne financière). Annual management fees can run 0.5% to 1% or more, especially when sold by conseillers en gestion de patrimoine (wealth advisors).

The math is brutal. Even at 0.5% annual fees, the fiscal advantage rarely compensates. The successoral advantage (tax-free inheritance allowance of €152,500 per beneficiary) only matters for about 10% of French households. For everyone else, a simple CTO (Compte Titres Ordinaire, ordinary securities account) investing in ETFs often delivers better net returns.

The prevailing sentiment among investment-savvy French residents is that assurance-vie contracts are oversold. Many argue that for short-term horizons under two years, there are simply no better alternatives, but that doesn’t make the product good, just convenient.

The only scenarios where assurance-vie truly shines, according to critics:

• Transmission outside direct lineage (to nephews, friends, etc.)
• High portfolio turnover strategies where tax-free rebalancing matters
• Hedging against future tax rule changes, opening a minimal contract as a free option

The Hidden Wealth Transfer

Here’s where the story gets spicy. Insurers have built up €152 billion in reserves from loyal policyholders. Now they’re using that war chest to fund “boosted” rates for newcomers, offering up to 5% for 6-24 months, while long-time savers see their base rates stagnate at 2-3%.

This creates a perverse wealth transfer: loyal customers subsidize marketing campaigns. The practice masks the mediocrity of floor rates. As one analysis notes, these bonuses mainly hide how uncompetitive the base rates really are.

The mechanism works because insurers know most customers won’t switch. Transferring an assurance-vie contract remains painful, despite the loi Pacte (Pacte law) supposedly enabling it, most transfers only work within the same insurance company. The promise of portability hasn’t materialized.

The Livret A Comparison: A Closer Race Than You Think

Since February 1, 2026, the Livret A pays 1.50%, tax-free and fee-free. To beat it, a euro fund must deliver at least 2.15% net after social contributions. At 2.65% gross, the net return under standard PFU (flat tax) is roughly 1.86%, actually below the Livret A.

Only after eight years, when the tax allowance kicks in (€4,600 annual gain exemption for singles, €9,200 for couples), does assurance-vie pull ahead for most savers. Until then, the Livret A often wins on simplicity, liquidity, and true net return.

The comparison gets tighter when you consider that the Livret A is capped at €22,950. For larger sums, assurance-vie becomes the default option, not because it’s great, but because there’s no alternative with capital guarantee and unlimited capacity.

Performance Reality Check: Not All Funds Are Equal

The 2.65% average masks huge disparities:

• Top performers: Corum Eurolife at 4.10%, Afer EuroGénération at 4.05%, Ampli-Mutuelle at 3.75%
• Bank networks: BNP Paribas Cardif averages 2.92% (with bonuses up to 4.55%), Crédit Agricole’s Predica runs 2.70-3.50%
• Laggards: Swiss Life Strategic at 1.70%, Generali base funds at 1.80-1.90%

The best rates often require minimum unité de compte (unit of account) allocations of 30-50%, pushing savers into riskier assets. Pure euro-fund contracts typically pay 0.5-1% less.

The Open-Source Reality Check

A developer recently published simulation code comparing CTO and assurance-vie returns. The findings challenge decades of conventional wisdom. When factoring in real fee structures and fiscal drag, the CTO wins in most scenarios for investors who don’t need the inheritance benefits.

This aligns with broader skepticism. The AMF (Autorité des Marchés Financiers, France’s financial markets regulator) has repeatedly warned that 80% of structured product buyers don’t understand what they own. The same opacity plagues many assurance-vie contracts, where fee disclosure remains buried in dense documentation.

Looking Ahead: 2026 and Beyond

Projections of 3.20% average returns by 2027 depend on bond yields staying high. If European Central Bank rates fall, insurers’ new investments will earn less, compressing future returns. The current bonanza reflects the stock effect, gradually replacing pre-2021 low-yield bonds with higher-yielding paper. Once that process completes, improvement stalls.

Meanwhile, the Livret A rate could fall further in August 2026 if inflation remains subdued. That would widen assurance-vie’s advantage, though not necessarily make it a good deal, just a less bad one.

Practical Takeaways

For emergency savings (2-4 months expenses): Livret A wins. No fees, instant access, state guarantee.

For medium-term goals (3-8 years): Shop aggressively. Compare net returns after all fees and taxes. Consider online platforms like Linxea or Altaprofits, which offer higher rates and lower fees than traditional banks.

For wealth transmission: Assurance-vie remains unmatched for non-linear heirs. The €152,500 tax-free allowance per beneficiary is valuable.

For long-term growth: Don’t default to euro funds. A diversified CTO with ETFs likely delivers better net returns, albeit without capital guarantee.

The record inflows of 2025 tell us more about scarcity of safe options than about assurance-vie’s inherent quality. When the Livret A pays 1.50% and inflation eats purchasing power, a 2.65% gross return looks attractive, until you peel back the layers.

The real question isn’t whether euro funds are “back.” It’s whether French savers have anywhere better to go. For now, the answer is: not really. But that doesn’t mean you should settle for mediocre. Compare, negotiate fees, and remember that capital guarantee has a price, and it’s often higher than advertised.