August Savings Policy Returns Show Mixed Performance, Menora Mivtachim Leads

August proved to be a positive month for savers in Israeli insurance policies across various investment tracks, with positive trends observed in most Tel Aviv Stock Exchange indices. The S&P 500, Nasdaq, and Dow Jones saw significant gains, though the Shekel's appreciation against the dollar partially offset these returns. The local bond market also contributed positively.

In the general track, which holds the majority of savers' funds, the average return in August was 1.03%. Menora Mivtachim led with a 1.38% return, followed closely 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 at 14.8%, and Menora Mivtachim third at 14.5%, against an average of 12.6%.

The stock track, requiring at least 75% exposure to equities, saw an average August return of 1.8%. Hachshara-Altshuler Shaham led with 2.5%, attributed to its exposure to international markets, particularly the US tech sector. Menora Mivtachim returned 2.25%, and Clal Insurance 2.2%. Long-term, Clal Insurance leads year-to-date with 14%, followed by Harel at 12.2% and Ayalon at 12.1%, with an average of 10.6%. In the last 12 months, Clal Insurance posted 26.7%, Ayalon 24.4%, and Harel 24.2%, against an average of 21.1%.

Policies tracking the S&P 500 index yielded an average of only 1% in August due to the Shekel's strength. Long-term, these tracking policies show significantly lower returns compared to active stock funds, with 5.7% year-to-date versus 10.70% for active stock funds, and 7.9% over the past year compared to 21.2%.

Savings policies, also known as financial policies, are insurance company-managed savings vehicles without any insurance component. They offer flexibility in deposit amounts and withdrawal timing, with tax deferred until withdrawal. Some general track funds are invested in illiquid assets, and policyholders can take loans against their funds. However, management fees can be as high as 2% of the accumulated sum, significantly higher than in investment provident funds.