Altshuler Shaham Investment Brand to Disappear After Major Decline

One of Israel's most prominent investment brands, Altshuler Shaham, is set to vanish within six months as its parent company, Altshuler Shaham Finances, undergoes a sale and rebranding. The pension and provident fund arm of the company will shed the 'Altshuler Shaham' name. The new brand identity will be determined by the controlling shareholders, Yair Levinstein (25%) and the insurance company Wenshel (45%), who are acquiring the majority stake. Following the sale, two distinct entities will operate under different ownership: the public company, focused on provident and pension funds, and the private Altshuler Shaham, which will retain mutual funds, portfolio management, and other services.

This rebranding marks the end of an era for a brand that was once the undisputed leader in Israel's provident fund market. Just five years ago, after acquiring Psagot's provident funds in 2021, Altshuler Shaham managed NIS 215 billion and held a 33% market share. Today, it manages only NIS 109 billion, with its market share reduced to 10%, ranking fourth behind Meitav, More, and Phoenix.

The decline is attributed primarily to client departures, driven by weak investment returns and a series of unsuccessful investment decisions. Altshuler Shaham suffered from significant exposure to the Chinese market during its downturn in 2021, was impacted by tech stock volatility in 2022, and saw its long-term bonds lose value due to rising interest rates. The company also maintained relatively low exposure to Israel during a period when the local stock market experienced a rally.

Gilad Altshuler, who long shaped the firm's investment philosophy, became synonymous with active investment management, which fueled the company's initial growth but later drew criticism for its performance. In recent months, Altshuler reduced his day-to-day involvement, a move now seen as a precursor to his departure from the firm bearing his name.

Beyond performance issues, Altshuler Shaham's past efforts to reduce reliance on insurance agents alienated some agents, who later facilitated client transfers to competitors when returns faltered. Meanwhile, the provident fund market intensified, with competitors like More and Analyst experiencing significant growth, partly at Altshuler Shaham's expense.

The company's pension fund, once envisioned as a major growth engine, also underperformed, managing only NIS 36 billion out of a NIS 1.3 trillion market, less than 3% share. While recent returns have improved and internal research indicated the brand's continued quality perception, the decision was made to abandon the name and start anew. The new owners also face regulatory challenges, as Wenshel's insurance company, Ayalon, recently received approval to re-enter the provident fund market, potentially creating a situation with two separate provident fund operations under common ownership.