Altshuler Shaham Pension Fund Buyers May Repatriate Billions to Tel Aviv Stock Exchange

Following the acquisition of the Altshuler Shaham pension fund by WeSure, a key question is whether the investment house, known for its significant overseas investments, will redirect substantial capital back to Israel. Under founder Gilad Altshuler, the firm has heavily invested abroad, with nearly half of its pension fund assets, approximately 53 billion shekels, exposed internationally as of June. Even with new ownership, a complete shift back to Israel is unlikely, as local investment houses generally maintain a high foreign exposure for risk diversification. However, analysts cautiously estimate that at least 5 billion shekels could return to the Israeli market. Such a move could potentially boost the Tel Aviv Stock Exchange, which has stagnated since a nearly 10% drop in June, and possibly weaken the dollar against the shekel by reducing dollar exposure.

This potential repatriation is partly driven by WeSure's intention to integrate the investment team of its subsidiary, Ailon Insurance, into Altshuler Shaham's management. Regulators may require this integration if both entities cannot operate concurrently in the pension market under WeSure's umbrella. Ailon's investment philosophy, particularly in its savings policies and recently in the pension market, leans towards higher exposure to Israel compared to Altshuler Shaham's previous strategy. WeSure Chairman Emil Winshal has also expressed optimism about improving Altshuler Shaham's returns, suggesting strategic changes are planned.

This potential shift comes after Altshuler Shaham, led by investment VP Leah Perminger, achieved the highest returns in the pension market recently, even as Wall Street outperformed Tel Aviv. Some industry insiders believe Altshuler Shaham is already changing its investment strategy, moving away from a 90% foreign allocation towards a more balanced approach that seeks opportunities wherever they lie, aligning with other major investment firms. This change is seen as a "diskette change" in their approach, with founder Gilad Altshuler reportedly stepping back.

However, some experts caution that the Israeli market's limited size might restrict the impact of billions of shekels flowing back. They suggest that such capital might primarily be invested in the largest, most liquid stocks like banks and insurance companies, or in large-cap stocks like Teva and Tower whose prices are largely determined internationally. While this could offer some support, significant market-wide impact is uncertain, especially given the potential for buying at inflated prices in a less liquid market. Ultimately, some believe upcoming elections might have a greater influence on the local market than these capital flows.