Savings Policies Show Positive Returns in August, With Leaders Varying by Strategy

August proved to be a positive month for holders of savings insurance policies across all investment tracks, with average returns of 1.03% in the general track and 1.8% in the stock track. While the Tel Aviv Stock Exchange saw modest gains, significant contributions came from abroad, with the S&P 500 rising 3.3% and the Nasdaq jumping 5%. However, a strengthening Israeli shekel against the dollar, up approximately 2.3%, offset a considerable portion of these foreign investment gains. The local bond market also contributed positively, with both government and corporate bonds adding around 0.4% in August.

In the general investment track, which holds the majority of savers' funds, Menora Mivtachim led in August with a 1.38% return, closely followed by Clal Insurance and Hachshara-Altshuler Shaham, both achieving 1.36%. Year-to-date, Clal Insurance leads with an 8% return, followed by Ayalon at 7.6% and Menora Mivtachim at 7.3%, compared to an average of 6.65%. Over the past 12 months, Clal Insurance also leads with 15%, Ayalon is second with 14.8%, and Menora Mivtachim third with 14.5%, against an average of 12.6%.

The stock track, which maintains at least 75% exposure to equities, saw Hachshara-Altshuler Shaham leading in August with a 2.5% return, attributed to its significant exposure to international markets, particularly the US tech sector. Menora Mivtachim followed with 2.25%, and Clal Insurance with 2.2%. Long-term performance in this track shows Clal Insurance leading year-to-date with 14%, followed by Harel at 12.2% and Ayalon at 12.1%, against an average of 10.6%. In the last 12 months, Clal Insurance posted 26.7%, Ayalon 24.4%, and Harel 24.2%, with the track average at 21.1%.

Savings insurance policies, also known as financial policies, are investment vehicles managed by insurance companies without any insurance component. Key advantages include the ability to deposit any amount without an annual ceiling, withdraw funds at any time, and switch between investment tracks without triggering immediate taxes. Some policies also invest a portion of funds in non-tradable assets like infrastructure and provide loan options at competitive rates. The primary drawback is the management fees, which can be up to 2% of the accumulated sum, and in some cases, are charged on deposits as well, significantly higher than alternatives like investment provident funds.