The French can boast both the biggest mutual fund industry in Europe and the market which is probably least interested in equities. Around 85% of investment is in money market and bond vehicles, a pattern which shows little signs of changing.

When interest rates were high (notably in the late 1980s/early 1990s) money flooded into money market funds. When rates fell, investments were withdrawn, but rather than going into equity funds they found their way into even safer State-run savings accounts and insurance products.

The first open-ended in-vestment vehicles (SICAVs) were launched in France in 1964, but the significant breakthrough only came in 1978 when tax incentives for investment in French securities were introduced. Two further acts in 1979 then made the regulatory regime more user-friendly and introduced Fonds commun de placement (FCPs) which now outstrip Sicavs in terms of popularity.

In 1982, the government tried to encourage investors out of short term deposits and into longer term stock market investment by removing the tax incentives on de-posits and allowing investment in French securities to be tax deductible. This worked for a while, and the mutual fund industry grew steadily.

Another lift off for equities seemed to be signalled in 1992 when a new equity savings plan was launched and the market was buoyed by a whole series of major corporate privatisations. The 1994/95 stockmarket de-cline put paid to this short-lived euphoria however. David Hunt