Protecting a French PEA from a stock market crash: what it allows and rules out

As of 3 November 2026, a French PEA cannot hold put options, gold or bonds directly. Inside it, the available cushions are cash earning no interest and certain eligible money-market or inverse ETFs, with costs of their own. A PEA invested entirely in MSCI World at the June 2007 peak lost 53.4% by March 2009 and did not regain its value until February 2013 (Copio calculation using MSCI data).

This article sets out what French law allows inside a PEA, the cost of withdrawing or holding cash during a fall, and which investments must sit alongside it.

Key takeaways

1. Waiting in PEA cash has a measurable cost. In our end-2000 to October 2026 scenario, 10% unremunerated cash reduces final wealth by €71,543 per €100,000 initially invested, and maximum drawdown by 3.8 points, from 49.1% to 45.3%.
2. Selling inside the plan and withdrawing from it have different consequences. Sale proceeds remain in the cash account; withdrawing before five years can trigger closure and tax unless an exception applies. Connect planned spending to the date of your first payment into the plan.
3. An inverse ETF does not permanently protect a PEA. The eligible example targets daily CAC 40 moves, with a path-dependent result. Consider your whole balance sheet when funding spending and absorbing a global equity fall.

What can you hold in a PEA?

Essentially shares and similar securities of EU or EEA companies, and funds continuously investing more than 75% in these securities. A few listed exceptions, such as certain ELTIF long-term funds, follow their own quotas; none allows options, gold or bonds to be held directly. Article L221-31 of the Monetary and Financial Code sets the list, explained by BOFiP in its 26 October 2026 version. Service-public states that the list of securities eligible for a PEA is set by law.

The contribution cap is €150,000 for a standard PEA and €20,000 for an adult attached to their parents’ tax household; gains do not count towards the cap. A standard PEA and a PEA-PME-ETI can coexist within a combined €225,000 contribution limit (Service-public, checked 22 May 2026). The PEA-PME-ETI accepts certain bonds convertible or redeemable into shares of small and mid-sized companies, but not government bonds or gold.

Why can an MSCI World ETF qualify when it mainly tracks US shares?

The fund holds European shares and exchanges their return for that of the world index through a swap with a bank. The iShares MSCI World Swap PEA UCITS ETF key information document, dated 9 April 2026, says it will continuously invest 75% of its assets directly in companies headquartered in an EU or EEA member state. The return follows MSCI World; the European basket satisfies the PEA rule.

This has two consequences. The PEA provides global equity exposure: MSCI World was 72.8% invested in US companies at 30 October 2026 (MSCI factsheet), a concentration our S&P 500 versus MSCI World ETF analysis examines. A PEA full of swap-based World ETFs still has one return engine: global equities. Their continued PEA eligibility was debated in summer 2026, as our long-term portfolio guide explains. Eligibility must be checked for each fund.

How much did a 100% MSCI World PEA lose in past crashes?

From the peak, it lost 53.4% in the financial crisis, 33.8% during Covid and 16.9% in the 2022 inflation shock, in euros with net dividends reinvested. We measured these falls using MSCI’s daily closing levels for MSCI World Net EUR, before the charges of a tracking fund.

For €100,000 at the peak: -€53,401 from 15 June 2007 to 9 March 2009; -€33,765 from 19 February to 23 March 2020; -€16,850 from 4 January to 20 June 2022.

Source: Copio calculation on MSCI World Net EUR, code 990100; losses and dates (CSV).

Month ends conceal part of the fall: the 23 March 2020 trough had already partly recovered by 31 March. In 2022 the stronger dollar cushioned euro investors’ losses: the euro fell from $1.1279 on 4 January to $1.0517 on 20 June, according to ECB reference rates. Our stock market crash study details fifteen asset classes through these same crises.

The PEA’s five-year threshold does not guarantee a gain. In euros, €100,000 invested in MSCI World at end-January 2001 remained below its starting value until February 2013, twelve years later (Copio calculation on month-end index levels). Five years protects the tax advantage, not the capital.

What happens if you withdraw during a crash?

Before five years, a withdrawal normally closes the plan; after five years, partial withdrawals are possible without closure. BOFiP explains the rules under Article L221-32 of the Monetary and Financial Code.

• Before five years: net gains since opening face 12.8% income tax, or the progressive scale by election, plus social levies, according to Service-public, checked 15 April 2026. For 2026 investment income, the general social levy rate is 18.6% (Service-public, checked 30 June 2026).
• Exceptions: withdrawals linked to redundancy, disability or early retirement of the holder or spouse do not close the plan, but gains remain taxable. A withdrawal reinvested within three months in starting or taking over a business is exempt from income tax but prevents further contributions.
• After five years: gains are exempt from income tax but remain subject to social levies; the plan continues and can receive new contributions.

Historical social levy rates can apply to portions associated with gains or payments before 2018 (Service-public). Ask the plan provider which rate applies to each portion of the gain rather than applying the general rate to all historical gains.

A forced withdrawal during a fall therefore costs more than tax. If the plan has a loss, there is no gain to tax, but closure loses its age: a new PEA starts its clock with its first contribution, and each person can hold only one standard PEA. Money withdrawn and spent no longer participates in a possible recovery; money reinvested elsewhere follows the new investment’s performance.

Selling a holding inside the PEA is not a withdrawal. The proceeds are credited to its cash account pending reinvestment (Service-public), without tax. The problem is that this cash earns nothing.

What does cash left in a PEA cost?

It forgoes the returns it could otherwise earn. A bank PEA’s cash account earns no interest and cannot be overdrawn (BOFiP, paragraph 40). We calculated €100,000 invested at end-December 2000 in MSCI World with 0%, 10% or 20% cash, rebalanced monthly to end-October 2026.

We also credited the cash with money-market interest, using ECB EONIA to September 2019 and €STR thereafter, to approximate a money-market investment before its charges.

At end-October 2026: €532,604 without cash, €461,061 with 10% cash earning 0%, and €397,074 with 20%.

Source: Copio calculation on MSCI World Net EUR, ECB EONIA and €STR; scenario results (CSV), monthly paths (CSV).

Annual growth and maximum drawdown: 6.69% and -49.1% without cash, 6.09% and -45.3% with 10%, 5.48% and -41.3% with 20%.

Source: Copio calculation on MSCI World Net EUR; scenario results (CSV).

Three lessons follow from this historical scenario.

• The protection is proportional; the cost compounds. Ten per cent cash cushions slightly less than ten per cent of the fall: maximum drawdown shrinks by 3.8 points. But 0.6 points less annual growth compounded over nearly 26 years leaves 13.4% less capital at the end.
• Earning interest on cash changes little over this period. The money-market rate averaged 1.39% a year, with long near-zero or negative stretches. A 10% allocation at that rate ends at €477,878, €16,817 more than cash at 0%, before fund costs.
• Lower volatility is not itself diversification. Cash does not fall in a crash, but does not rise either: it dilutes the equity engine rather than adding another.

The scenario rebalances monthly, buying equities after each fall. Cash left aside without rebalancing would produce a different result. The period also matters: from end-2000 to end-2012, even cash at 0% beat MSCI World in euros, which remained below its starting level.

What cushions are available inside a PEA?

Three, none performing the same role as a put or a government bond.

• Cash. It does not fall, earns nothing and weighs on growth, as the calculation shows.
• An eligible money-market fund. The iShares € Short Term Swap PEA UCITS ETF key information document, dated 9 October 2026 (IE000I4R3252), targets an index paying €STR plus 0.085% through a swap while holding at least 75% eligible shares. It lists annual management charges of 0.20%, transaction costs of 0.03% and a risk class of 1 out of 7.
• Another money-market example. The Natixis FCP PEA Court Terme product sheet describes a comparable objective: €STR less ongoing charges. These funds depend on their swap agreements and the banks providing them.
• An inverse ETF. The Amundi CAC 40 Daily (-1x) Inverse UCITS ETF (FR0010591362) is PEA-eligible and targets the inverse of the CAC 40’s daily return. Its 31 July 2026 factsheet warns that beyond one day its performance may even move in the same, rather than opposite, direction. It lost 85.15% from launch on 9 June 2008 to 31 July 2026, and 6.92% in 2020 despite the Covid crash.

This ETF targets the inverse of the CAC 40’s daily move. Over several days, compounding, fees and mismatch with the shares held can move its result away from the intended hedge. The factsheet therefore does not guarantee lasting protection for a global portfolio. These examples illustrate mechanisms and are not recommendations.

Diversifying regions or styles can reduce some concentrations but does not guarantee protection against a global equity fall. Our falling-month study shows that major equity regions fall together when the market drops.

What can sit alongside a PEA for protection?

Investments that have often followed different return drivers from equities belong outside the PEA.

• An ordinary securities account can hold all types of securities, including bonds, warrants and ETFs, without a contribution cap, according to the AMF, 16 December 2025. Gold, government bonds or put options can sit there, but income and gains are taxed. Our put-option analysis shows that a hedge can reduce a loss yet leave less capital at the end.
• French assurance-vie offers euro funds, whose average credited return on individual contracts was 2.63% in 2025, after charges on assets and before social levies, according to the ACPR. In 2026 its social levy rate remains 17.2%, compared with the general 18.6% rate (Service-public).

Our correlation-by-horizon study shows that government bonds and gold did not protect in every crisis: in 2022, bonds fell with equities. Assess each solution by its job: fund spending, limit a loss or make a gain during a fall. Then compare whole-portfolio growth after costs and taxes, including years without a crash.

What does copio conclude?

Protecting a PEA is a decision about your whole balance sheet and the spending it must fund. Its cash can finance purchases after a fall but earns no interest. An inverse ETF targets a specific index and daily move; it does not guarantee protection of a global portfolio throughout a crash. Judge the choice by the loss to absorb, money available at the right time and its cost after fees and taxes.

Three checks for your PEA

1. Connect the PEA’s age with your cash needs. Record the first contribution date and spending planned before and after its fifth anniversary. Identify an available resource for each expense and check the tax consequences of withdrawing, including closure exceptions. A sale inside the plan and a withdrawal are different transactions.
2. Give the cash account a purpose and a deadline. Calculate its share of the PEA and separate money waiting to be invested from money intended for spending. Compare no interest with the fees, risks and terms of an eligible money-market fund, without assuming capital is guaranteed. Set a review date so temporary cash does not become a permanent allocation by default.
3. Test the loss across your whole balance sheet. Use a 53% fall in equities as a severe scenario inspired by 2008, then calculate the euro loss and remaining cash outside the PEA. It is neither a forecast nor an exact replay of your holdings. For a hedge, record index, currency, expiry or daily reset, then compare its cost with the loss it aims to reduce.

The portfolio checker can inspect supported funds. Copio provides educational analysis and does not choose an allocation or place trades for you.