Israeli Pension Funds See Strong August Returns After Weak Months

Israeli pension and provident funds experienced a significant rebound in August, reversing a trend of weaker performance in the preceding two months. General provident fund tracks reported an average return of 1.1% for August, with returns ranging from 0.7% to 1.4%. Aggressive equity-focused tracks saw even higher gains, rising by 2% with a range of 1.6% to 2.5%. This positive performance was attributed to strong gains in global stock markets and both government and corporate bonds in Israel, despite market volatility.

The strengthening Israeli shekel against the US dollar impacted returns, reducing the overall gain by approximately 0.4% in the general track. Even the S&P 500 track, which is sensitive to currency fluctuations, finished August with a 1% increase, despite the shekel appreciating by 2.3% against the dollar.

Globally, the US stock market led the charge, with the S&P 500 up 3.3% and the Nasdaq jumping 5%. The German DAX rose 3.1%, while Japan's Nikkei surged nearly 8%. In contrast, the French CAC experienced a nearly 2% decline. Domestically, the Tel Aviv 35 index gained 1.1% and the Tel Aviv 125 index followed with a 0.9% increase. However, the Tel Aviv 90 index saw a modest 0.2% rise, and the TA-60 index declined by 3%.

Year-to-date, provident funds in the general track have yielded an average of 6.6%, with equity tracks up 11% and the S&P 500 track up 6%. Pension funds for those under 50 have seen an 8.8% increase, while those over 50 have gained nearly 6%. The Tel Aviv 35 index remains the top performer globally year-to-date with a 14% increase, followed by the Tel Aviv 125 at 10.7%. The S&P 500 has gained 12.3% and the Nasdaq 13.5% year-to-date. Bond markets also showed positive returns, with government bonds up 2.5% and corporate bonds up 3.1%.