The economy of France is the third largest in the European Union and the seventh largest in the world. In fact, some of the biggest insurance, airline, cosmetic, luxury, and energy companies are based in the country. Because of these things, it is one of the best places for international investors, especially in Europe, to put their money. There are many different ways to invest here, from exchange-traded funds (ETFs) to American Depository Receipts (ADRs) (ADRs).
How to use ETFs to invest in France
Exchange-traded funds (ETFs) are a simple way for investors to get diversified exposure to the French market. ETFs are generally thought to be less risky than individual stocks with lower beta coefficients because they hold a basket of securities from many different industries. But unlike mutual funds, they can be traded like stocks at any time during the day. The MSCI France Index Fund ETF (EWQ), which tries to look like all French publicly traded securities, is the main ETF that is used to invest in this country.
Some of the most-invested-in ETFs in France are:
- ETF MSCI France Index (EWQ).
- SPDR DJ Euro STOXX 50 ETF (FEZ).
- MSCI EMU Index Fund (EZU).
- Franklin FTSE France ETF (FLFR) (FLFR).
- iShares ETF Europe (IEV).
How to invest in France in Other Ways
American Depository Receipts (ADRs) or direct investments on the Euronext Paris could be good options for investors who want more direct access to French companies. Even though there are a lot of French ADRs, investors should be aware that many of them trade on the OTC Market’s pink sheets. This means they may not be as liquid as companies that trade on the NYSE or NASDAQ. The OTC pink sheets may not be very liquid, so it may be hard to find buyers for your holdings when you want to sell.
Some of the most common ADRs for investing here are:
- Veolia Environment (VEOEY).
- AXA (AXAHY).
- L’Oreal (LRLCY) Suez (SZSAY) LVMH (LVMUY).
Good reasons to put your money in France
France is a safe place to put money because it has a big economy. The following are more reasons to invest here:
Developed markets
The country has one of the world’s largest economies, and its securities market is one of the most developed globally. Compared to some emerging and frontier markets, this usually means less geopolitical risk and volatility.
Large companies
It is home to many of the biggest companies globally, which usually makes the market less volatile. Larger companies’ long-term earnings tend to be less volatile and more predictable.
How risky it is to invest in France
As the sovereign debt crisis in the European Union has shown, the country’s financial ties to other countries in the E.U. have created some major risks. Investing in France comes with the following risks:
EU Structure
France is the third-largest country in the European Union, so it may have to pay for a lot of bailout money. During the European sovereign debt crisis, it became clear that this was a big problem.
Socialist tendencies
France has a lot of socialist ideas, which could make it hard for some businesses to compete. For example, the workweek is only 35 hours, and the retirement age is only 62, which is lower than in many other developed countries.
Things to think about if you want to invest in France
France is one of the top ten economic powers in the world, and it has a lot to offer investors from other countries:
- The location is in the middle of Western Europe, which is a good place to be.
- A strong agricultural production capacity, a developed tertiary sector (including tourism), and a large industrial base.
- The best public services and infrastructure.
- A skilled and productive workforce and a young population.
- A business environment that encourages investment and a legal system that is primarily stable and clear
- A diverse economy with many different kinds of businesses, from large multinationals to small high-tech start-ups.
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