Israeli Mutual Fund Industry Sees Strong September Inflows, Investors Favor Overseas Markets

Israel's mutual fund industry experienced significant growth in September, attracting net investments of approximately 6.5 billion shekels. Money market funds were the primary driver of this inflow, accounting for over half of the total, with about 3.51 billion shekels. Excluding money market funds, the industry saw net inflows of approximately 2.95 billion shekels, including 1.15 billion in traditional active funds.

The passive fund sector, which tracks specific indices and sectors, also had a robust month, drawing in 1.8 billion shekels. This marks the second consecutive month where passive funds outperformed traditional active funds in terms of inflows. Within the passive sector, index-tracking funds raised 1.4 billion shekels, and exchange-traded funds (ETFs) garnered 390 million shekels.

A notable trend observed in September was the public's increasing preference for foreign stock markets over the Israeli market. Funds specializing in international equities attracted 1.33 billion shekels, with 1.13 billion directed to passive foreign equity funds. Conversely, Israeli equity funds experienced net redemptions of about 150 million shekels, with passive Israeli equity funds seeing only 40 million shekels in inflows.

In the traditional active fund space, general bond funds led with 800 million shekels in inflows. Government bond funds attracted 280 million shekels, and corporate bond funds saw 80 million shekels. When factoring in passive funds, total inflows for government bonds reached approximately 397 million shekels, and corporate bonds reached 370 million shekels.

These investment trends occurred against a backdrop of mixed market performance. In the U.S., the Dow Jones fell by about 4.3% and the S&P 500 lost 0.5%, while the Nasdaq rose 1.9%. In Israel, the TA-35 index increased by 1.6% and the TA-125 gained 0.5%, though the TA-90 index declined by 2.7%.

Year-to-date, the mutual fund industry has raised 57.8 billion shekels, with money market funds alone contributing 34.2 billion shekels. The total assets under management in the industry reached approximately 855.5 billion shekels by the end of September, an increase from 846.4 billion at the end of August and 757 billion at the end of 2025. This September increase was driven by net inflows of 6.5 billion shekels and a valuation gain of 2.6 billion shekels.