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TLDR:
- FCPI and FIP funds in France promised tax breaks for retail investors but are failing to deliver.
- High fees, cash drag, and disappointing investments have led to negative returns for many investors.
Majority of French VC funds for retail investors fail to deliver
In France, retail investors have had access to private markets funds for over two decades, but many have delivered negative returns – impacted by high fees, cash drag, and, in some cases, disappointing investments. Mutual funds for investment in innovation (FCPI) were created in 1997 with the promise of offering investors up to 25% tax break on their income, and local investment funds (FIP) were launched in 2003. They are required to invest at least 70% of their capital in SMEs. However, with the tax reduction being cut to 18% this year, and the difficulty in generating good returns plaguing asset managers, these funds may slowly become obsolete.
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