Israeli Mutual Fund Industry Hits Record High of NIS 853 Billion

Israel's mutual fund industry has achieved a historic milestone, surpassing 853 billion shekels (approximately $230 billion USD) in assets under management. This represents a staggering 143% growth since March 2021, when the industry's assets stood at 351 billion shekels. The impressive surge is attributed to two primary factors: significant gains in stock markets over the past three years and a high-interest-rate environment that has attracted investors, including newcomers, to money market funds seeking stable returns.

Analysis by Naor Cohen, advisor relations manager at Meitav Investment House, indicates that the industry could potentially breach the one trillion shekel mark within the next 18 months. The growth includes approximately 280 billion shekels in new capital inflows and 222 billion shekels from market appreciation.

Over the last five years, investor preferences have dramatically shifted. Money market funds have seen explosive growth of 914%, increasing their share of the industry from 6% to 25%. Passive funds, including index funds and ETFs, also experienced substantial growth of 145%, becoming dominant. However, recent trends suggest a potential shift back towards actively managed funds, which saw 6% growth in the last six months compared to 2% for passive funds, indicating a renewed search for active investment management.

This record-breaking performance follows a consistent trend of growth, with the industry having previously set an all-time record in December 2023, reaching 750 billion shekels for the first time.