Finance Glossary
Structured funds (or formula funds)
What is a structured fund?
A structured fund, also called a formula fund, is a fund that offers a predefined performance promise through the application of a calculation formula indexed to financial markets.
The different types of structured funds
There are 3 types of structured funds:
A – "Guaranteed capital formula funds," for which the investor is assured of recovering 100% of their initial capital (excluding subscription fees) at the fund's maturity, even in the event of an unfavorable evolution of the reference index/indicator on which the formula is based;
B – "Protected formula funds": a portion of the initial capital (excluding subscription fees) is guaranteed at maturity (for example, 90%), which helps limit the risk of loss in case of a significant decline in the reference indicator on which the formula is based;
C – "Formula funds with a deactivating barrier": these funds, with non-guaranteed capital, preserve the capital only up to a certain level of decline in the reference indicator. Most often, if the indicator falls below this threshold, the investor bears the full loss on their net personal contribution after entry fees.
Structured funds are generally marketed within the tax framework of life insurance or the PEA (equity savings plan) for a limited period.