The shift towards ETFs among French retail investors is redefining the approach to financial markets. In the first half of 2026, the AMF reported more individuals buying an ETF for the first time than those buying an individual stock, according to the retail investor dashboard published in September 2026. This structural shift alters the considerations regarding wrappers, taxation, and portfolio construction.
Regulatory risk on the PEA: what the Court of Auditors is questioning
The PEA remains the preferred wrapper for investing in the stock market with reduced taxation after five years of holding. The exemption from income tax on capital gains is its main advantage compared to the ordinary securities account subject to the flat tax.
In September 2026, the Court of Auditors requested an evaluation of the derogatory provisions to the flat tax, explicitly targeting the tax exemption of the PEA after five years. This initiative does not imply an imminent removal, but it introduces a concrete regulatory risk into any long-term wealth strategy.
Incorporating this risk into the allocation calibration is necessary. An investor who concentrates their entire equity capital in a PEA is exposed to a change in rules without an immediate tax alternative.
Combining the PEA with a life insurance policy in unit-linked accounts or a securities account allows for the distribution of regulatory risk, even if the current tax cost is higher on these wrappers. Detailed information available on the impact-patrimoine.fr website on the stock market allows for a comparison of these wrappers according to your situation.
ETFs vs individual stocks: making choices based on your portfolio
The rise of ETFs does not render stock selection obsolete. It shifts the required skill set to justify stock-picking against a tracker replicating a broad index.
When the ETF is sufficient
For an investor whose goal is to capture the overall performance of a market, a broad index ETF meets the need without fundamental analysis. Annual management fees remain significantly lower than those of an active fund, and diversification is immediate from the first share purchased.
The AMF also notes that the increase in the number of active individuals in the first half of 2026 was concentrated on ETFs and stocks, but reminds that the number of active investors measures those who have made at least one transaction, not the performance of their portfolio.
When stock-picking remains relevant
The purchase of individual stocks is justified in specific cases:
- Targeted exposure to a sector theme not covered by available ETFs on the PEA
- Dividend yield strategy with selection of companies paying a regular and increasing coupon
- Fundamental conviction about a company after thorough financial analysis (balance sheet, cash flow, competitive positioning)
Mixing ETFs and individual stocks in the same portfolio creates a risk of double sector exposure. An ETF CAC 40 already contains the large French capitalizations: buying TotalEnergies or LVMH stocks in parallel amounts to overweighting these lines without necessarily measuring it.
Portfolio construction: common technical mistakes
Diversification is not just about multiplying positions. We regularly observe portfolios containing a dozen ETFs whose underlying assets overlap by more than half.
Checking the correlation between held assets takes precedence over the number of positions. Two geographically distinct ETFs (Eurozone and United States) provide more real diversification than five European sector ETFs whose components overlap.
The target allocation depends on the investment horizon and tolerance for temporary losses. Here are the parameters to set before any purchase:
- Minimum holding horizon: below five years, the probability of exiting with a loss on an equity portfolio significantly increases
- Maximum share of total wealth exposed to financial markets, after establishing a precautionary savings
- Frequency of contributions: scheduled investment (monthly or quarterly) smooths the risk of unfavorable entry points
- Rebalancing threshold: define in advance the tolerated deviation from the target allocation before intervening
Taxation of capital income: PEA, securities account, and flat tax
The flat tax taxes the income and capital gains of the securities account at a global rate including social contributions. The PEA, after five years, exempts the income tax portion but not the social contributions.
The choice of wrapper determines the real net return more decisively than the selection of the assets themselves for modest portfolios. Over a ten to fifteen-year horizon, the tax gap between PEA and securities account represents several points of cumulative return.
The question of the PEA contribution limit remains a limiting factor for investors with more substantial capital. Beyond the limit, the ordinary securities account becomes the only option for direct stocks, unless going through unit-linked life insurance which adds wrapper fees.
The debate opened by the Court of Auditors on the tax advantages of the PEA reinforces the interest in a multi-wrapper strategy. Concentrating all equity investments in a single tax vehicle amounts to betting on the stability of a regulatory framework that public authorities are actively reassessing. Distributing positions between PEA, life insurance, and securities accounts does not optimize taxation in the short term, but protects long-term flexibility.
