Investment Horizon

Unsurprisingly, the style of investing that appeals to the French meets their taste for grand, long-term designs, exemplified by the Parisian Boulevards, the High Speed TGV train or the Channel Tunnel. The latest grand design is on combating ageing, setting up a reserve fund with the challenge of developing a strategic vision on long-term investing, and developing an appropriate investment style. French Fonds De Reserve Pour Les Retraites (FRR) was founded in 2001, with assets of $34.5 billion at end 2007, contributing to the funding needs of three pay-as-you-go (PAYG) retirment plans: the Old Age Fund, the Fund for self-employed retailers and business heads, and the Fund for skilled tradespersons.¹ Under the terms of theparliamentary act, the FRR will make no financial contribution to these pension funds prior to 2020, and that is what makes it special. The FRR is created to serve the pension system, taking on a portion of the expenses of basic private sector plans as of 2020, when the full impact of the demographic shock will begin to be felt. The fund’s termination date is also known – somewhere between 2040 and 2050.