(News Bulletin 247) – The CAC 40 GR, which assumes that dividends paid are reinvested in the securities, has exceeded its records several times this year, unlike the main index. This measurement of the CAC 40 is more appropriate for gauging the performance of an investment in the stock market, especially from a medium-term perspective.

We have written many times, the CAC 40 remains behind the major European and global indices this year, weighed down by political uncertainty and a luxury sector which was not in the best shape, at least until mid-summer.

The Parisian index has certainly increased by 10.8% since the start of the year, but this progression is lower than that of the S&P 500 (+13% at the European close on Friday), Wall Street’s benchmark index. The gap is even significant with the IBEX 35 (+34.5%), that of Madrid, or the FTSE Mib (+22.15%), that of Milan.

Above all, the tricolor barometer has certainly come very close to its records this week. But he has not yet surpassed them, either during the session (8,259.19 points) or at the close (8,239.99 points). These peaks were reached in May 2024. Conversely, the other major European and American indices have continued to push back their historic highs this year.

Although we will still have to wait to see the CAC 40 break new records, another “version” of the index with exactly the same composition has already exceeded its historic highs: the CAC 40 known as “GR” (for “Gross Return” or “gross return”).

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A thermometer that has important qualities

Behind this somewhat cryptic name, the CAC 40 GR reflects a fairly simple reality: how would the CAC 40 behave if we assumed that dividends were reinvested in the share?

Let us remember that the CAC 40 is based on prices which “correct” the dividend, recalculated once the dividend has been detached. For example: if a CAC 40 share prices 100 euros but pays a dividend of 1 euro per share one day later, the CAC 40 will continue to take as a basis for calculation a price – all things being equal – of 99 euros.

If the CAC 40 therefore does not include the coupons paid in its calculation, this is not the case for the German DAX 40 which takes them into account.

Created in 1994 by Euronext, the operator (in particular) of the Paris Stock Exchange, the CAC 40 GR adopts the same calculation method as the DAX 40, therefore assuming that the dividends paid by CAC 40 companies are reinvested by the holders, which gives a more complete measure of profitability.

“Rather than the CAC 40, in the long term it is better to follow the CAC 40 GR, with reinvestment of dividends” wrote the financial letter Vernimmen in a Linkedin post from 2007. “It gives a whole other dimension to the performance of shares, particularly over the long term. To know the long-term performance of an investment in the 40 companies making up these indices, it is better to take into consideration the CAC 40 GR, rather than the CAC 40 ‘classic'”, says BforBank.

“Indeed, the CAC 40 GR comes closer to defining the profitability of an investment in shares which depends on the evolution of its value on the market and the amount of dividends paid during the duration of the investment,” adds the online bank.

At its highest in February then in October

Unlike the CAC 40, the CAC 40 GR has therefore already broken its May 2024 records, many times. As early as February in fact, the index exceeded these peaks, both during the session and at the close. It then continued to progress in March. On the other hand, like the “traditional” CAC 40, the GR index suffered a violent halt in April with reciprocal customs duties, which seriously weighed down it.

It began to regain color during the summer, but it had to wait until October to once again surpass the records set at the start of the year. Its last highs were recorded on October 17 during the session (26,502.33 points) and on October 16 at the close (26,386.44 points).

Over the whole of 2025, the CAC 40 GR gains 14.35%, a performance which brings it a little closer to the DAX 40 (+19.7%).

When we look at the evolution of the CAC 40 “GR” on a graph, its curves over a sufficiently long period are similar, to the point that they almost co-merge with those of the CAC 40.

Which shows that, if the CAC 40 GR gives the market another thermometer, considered more reliable, of performance, its drivers of increase are the same as those of the “ordinary” CAC 40. “Dividends do not influence the trajectory of the CAC 40,” Alexandre Baradez, head of market analysis at IG Markets, explained to News Bulletin 247 in a previous article.

In other words, like its counterpart which detaches dividends, the CAC 40 GR remains penalized by political uncertainty in France and budgetary questions.

Political uncertainty

However, the trajectory of French public finances remains a source of concern. On Wednesday, Goldman Sachs indicated that it was counting on a deficit of 5.3% of GDP for 2026, while Prime Minister Sébastien Lecornu declared this week that the rate should not exceed 5% in the 2026 finance bill, once the parliamentary debate is completed.

“We still anticipate little progress in reducing the public deficit (…) In any case, deep political disagreements, slowing growth and higher borrowing costs risk preventing any significant progress,” the bank said.

“The ambient political uncertainty obscures tax visibility, an element that is nevertheless essential for investors,” judges Apicil AM.

The CAC 40’s lifeline could come from its internationalization. According to the latest study from the EY firm, 77.1% of residents’ income is generated outside France (this rate excludes, however, the Axa and Unibail-Rodamco-Westfield banks). Luxury, a sector over-represented in its market capitalization (LVMH and Hermès are the two largest groups in the index on this criterion), is very little exposed.

“The French clientele remains very limited for French luxury groups. Facially, it represents less than 10% of the overall turnover of these groups. But at least half of this turnover is generated by tourists who buy luxury products in France. As a result, the “real” exposure to the French consumer is probably closer to a figure less than 5%”, explained a financial intermediary to News Bulletin 247 at the end of August.