Investing in Morocco: OPCVM

OPCVM is a way of investing in Morocco and is an acronym for “Organisme de Placement Collectif en Valeurs Mobilières” which means a collective organization for investing.

In plain English, it means a financial institution that gets money from different people and invests it in the stock market following pre-defined allocation rules.

What I mean by “pre-defined allocation rules” is all investors will know beforehand in which industries they’ll invest in.

For example, you’ll find some OPCVM that invests 50% in telecom companies, and 50% in building companies. Others, 30% in banks, 40% in manufacturing, and 30% in consumer goods. And so on. These allocations are known beforehand, so when you sign up you’ll know your risk and potential returns.

Also, these financial institutions will manage your money for you, so when you invest, you don’t need to keep track of things daily. They’ll send you updates quarterly/yearly (depending on the institution and the OPCVM).

If this is not the way you want to use for you investing strategy, please see our page for other ways of investing in Morocco.

When you invest in an OPCVM, you buy a “part”. This is totally different from a share in a company. When we talk about shares in a company, we talk about a fixed amount of shares. Buying a share means someone else sold you his share. Buying a part in an OPCVM doesn’t mean someone else sold you his part. And we’ll see why in detail next.

OPCVM returns

Think of an OPCVM as a big bank account, when you buy a part, what you really do is put your money on that big bank account. On the other side, the financial institution will get the money you just deposited, combine it with money from other investors, and invest it. Yes, actually buying shares or other financial instruments with it. Or sometimes keeping it in cash if they think it would be better.

The price of your part is defined by the OPCVM portfolio. The bigger and more worthy the portfolio, the higher the price of a part.

Price of your parts going up

Given your money is invested in stocks, whenever these stocks go up or down, your parts will also follow. But like the stock market, it’s hard to quantify the returns. They can go up, down, or stay flat. One thing is sure, they are more than Compte sur Carnet returns if positive, and more than stock market if you do the trading yourself.

Dividends are re-invested

As we’ve seen, an OPCVM is actually holding shares in companies. And if you remember from the stock market introduction, companies distribute dividends each year. But those dividends are sent to the OPCVM, not you! What happens with that money? Good question, it’s re-invested*. Dividends reinvested => higher returns => your parts are worth even more.

You’ve just learned the compounding effect. In the stock market, whenever you get dividends, you need to manually re-invest them to achieve a compounding effect. In an OPCVM, it’s done automatically.

* There are few exceptions to this, 2 or 3 OPCVMs that re-distribute the dividends instead of re-investing them.

OPCVM Costs

Management fees

As all of this is done automatically for you, you guessed it, it’s paid!

Generally speaking, banks and financial institutions are regulated and can’t ask for more than 2% management fees per year. Each OPCVM will have the details attached to it, so make sure you catch that.

Buying/selling fees

I told you earlier when you invest in an OPCVM, your money is used to invest in financial instruments. This process is done manually, by an actual human, and thus, there are fees involved. Introducing the cost of buying.

The same story is when you want your money back. An actual human needs to sell some stocks to give you your money back. A manual step = fees. That’s the cost of selling.

If you want to invest in the long term, those costs are marginals and shouldn’t stop you. In general, they are between 0%-3%.

How to buy an OPCVM

So investing in an OPCVM is a two steps process:

Figuring out which OPCVM to invest in

You can find a list of all OPCVMs in Morocco here. This site also posts an Excel sheet every day with the performance of each OPCVM. Sadly, those are the only resources you’ll find about this subject.

However, I’m building a tool that would make this useful: See past data, simulate your investments, know which OPCVM is best for you, etc. If you want to get it before everyone else, send me an email or a DM on Twitter. I’ll add you to a secret list 🙂

Invest in the OPCVM

Next is to head to your bank and ask them to buy that OPCVM for you. But beware of fees!

Banks love fees, and they’ll charge you fees for holding your OPCVMs. The exception to this is if the OPCVMs you buy are managed by the bank or a subsidiary of the bank. At least, that’s how it is in CFG Bank.

So a better idea here is:

  1. Pick an OPCVM managed by a bank or a subdiary
  2. Open an account with that bank
  3. Buy the OPCVMs

This way you can at least skip some fees.

Taxation

Between 15-20% of the extra money you made once you sell your OPCVM. You can see the exact number on each OPCVM.

The number changes following the nature of investments. For example, an OPCVM investing 100% in the stock market, will have a 15% taxation (that’s the taxation law regarding stock markets). An OPCVM investing in other financial instruments, like bonds, will have different taxation.

Thoughts

This is the best way to invest for the long term, ie 5-10 years. It combines a few advantages not found in other solutions:

  1. Low barrier for entery: There are so many OPCVMs, ranging from 100 MAD to more than 2 million MAD per share.
  2. Diversified portfolio: Contrary to the stock market, where you need a huge amount of money to diversify your portfolio. Your investment is diversified from day one with an OPCVM and with a price as low as the price of a part.
  3. Auto-pilot: Investing in an OPCVM is an auto-pilot investment. Once you invest, no extra steps are needed. You just let the financial institutions do the job.
  4. Good returns: The returns you should expect are +4%, and sometimes exceeding that by a lot (20% during the COVID recovery)
  5. Compounding: Dividends from the stock market are re-invested in the OPCVM. Which makes compounding easier.

Remote.ma investing score:

9/10

Rating: 9 out of 10.

We just love the OPCVM approach for investing

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