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Everything can change

Laws can change​

Following the Brexit, effective Jan 31st 2020, UK-based stocks have lost their eligibility to the PEA. Impacted investors had to either sell their positions, or transfer them into a CTO, thus losing any tax benefit.

Fees can change​

In the 5 years I have been investing so far, I faced various modifications of fees from my brokers:

  • Saxo bumped US-traded stock fees from $0.01/transacted share, to a minimum of $8/transaction (2020), to a minimum of $1/transaction (2024).
  • Degiro increased fees of US-traded stocks from 0.50€/transaction to 1€/transaction (2022), to 2€/transaction (2023).

ETFs can change​

In 2019, Amundi - one of the largest European ETF providers - made changes its ETF offering, leading to the loss of PEA eligibility for a number of them. Impacted investors were forced to sell them, incurring transaction fees.

Late of 2023, Amundi - again - announced a series of shakeups to its offering as a consequence of the acquisition of Lyxor. For example: the ETF Amundi ETF PEA NASDAQ-100 UCITS ETF changed name to become Amundi PEA US Tech ESG UCITS ETF

This change in name was accompanied by this list of impacts (values as of March 1st 2024):

  • Changed index from the Nasdaq-100 Index to the Solactive ISS ESG US Tech 100 Index.
  • Reduced diversification: 42 holdings for the new index vs 100 for the previous.
  • Apple represented 21.07% of the new index against 8.73% in the previous (x2.4).
  • Top 3 holdings had a weight of 53.24% in the new index against 22.52% in the previous (x2.4)
  • Increased fees from 0.23%/year to 0.30%/year.

Stocks can change​

Multiple reasons exists for stocks to be altered, usually through:

  • Mergers: when 2 companies agree to become one, shareholders of both entities usually receive stocks of the combined entity.
  • Acquisitions: when one company acquires another one, shareholders in the acquired company usually get stocks of the acquiring entity, receive cash, or a mix of stocks and cash.
  • Privatization: when an investor decides to buy the majority of its shares and removes the company from the stock exchange (inverse of an IPO).
  • Liquidation: when a company stops operating, its assets are distributed in a specific order of priority in which common stock holders are usually the last ones to be served (often close to $0).

Dividends can change​

Some investors focus on dividend-growing companies, the ones pushing the streak beyond 25 years join the club of the "Dividend Aristocrats". However, long streaks of growing dividends are not making a company immune to a dividend cut.

Most recent examples include:

  • 2024: Walgreens (WBA), 48% dividend cut after growing the dividend annually for 47 years.
  • 2023: W.P. Carey (WPC), 19.7% dividend cut after growing the dividend annually for 26 years.
  • 2023: V.F. Corp (VFC), 70% dividend cut after growing the dividend annually for 50 years.
  • 2021: AT&T (T), 47% dividend cut after growing the dividend annually for 35 years.

Examples of streaks at risk include:

  • 3M (MMM): 66 years
  • Walgreens (WBA): 47 years -> Cut in 2024
  • Stanley Black & Decker (SWK): 56 years

Earnings can change​

The main driver behind long-term stock performance is earnings growth. The more a company generates cash and keeps generating more year after year, the higher the stock price goes. The economic environment can change, and earnings can face dramatic variations (think of Covid).

Winners can change​

Coming soon!